Boston, MA 09/05/2014 (wallstreetpr) – The Wet Seal, Inc. (NASDAQ:WTSL) announced the return of its former CEO, Edmond Thomas, to take over from John Goodman, who is leaving the company. Analysts expect Thomas to right the ship, and eliminating poor assets may be among his priorities. The company is battling revenue decline and soaring losses as competition and soft store traffic hurt sales.
The company announced top leadership changes amid disappointing 2Q results. Its sales in the quarter ended August 2, were down 12% to $121.2 million. The sharp decline in sales was linked to a massive drop in same-store sales. The company reported 12.4% drop in same-store sales in the quarter. The apparel retailer estimated 2Q adjusted loss of $0.15 a share, bigger than $0.10 per share loss that analysts are seeking for the quarter.
Unloading non-core assets
Although the past performances have been weak, analysts are hopeful that the return of Thomas at the helm will mark the beginning of good things in the company. Analysts at Piper Jaffray expect Thomas to have little influence in the business in the current year. However, they expect far-reaching restructuring in the company in 2015 when Thomas will have a good time to try to stabilize and energize The Wet Seal, Inc. (NASDAQ:WTSL). Piper Jaffray’s Stephanie Wissink also thinks that Thomas will move to unload non-core assets while aligning capital to areas where stability can be achieved.
In the previous case, Thomas was CEO of The Wet Seal, Inc. (NASDAQ:WTSL) from 2007-2011. He was also COO in the company between 1992 and 2000.
Thomas ignites hope
Clinton Group, one of the largest shareholders in The Wet Seal, Inc. (NASDAQ:WTSL), supported the rehiring of Thomas to steer the apparel retailer. The investor observed that Thomas has what it takes to help the company achieve growth in terms of revenue and profitability. Clinton Group owns about 7% stake in Wet Seal.
The Wet Seal, Inc. (NASDAQ:WTSL) will offer Goodman, the outgoing CEO, severance cash of $819,200, without accounting for $100,000 shares in restricted stock.
