The teen retailer has been terrible at identifying its core customer. And as dELiA*s and DEB Shops liquidate, it doesn’t have much time left to get it right.
On Wet Seal's website, there's a model in a Pikachu “muscle tank,” gazing to her left as her blonde hair flies across her face, one hand in the pocket of her bizarrely-folded jeans. Are they bell bottoms? What's with the cat-ear tiara on her head? Pikachu beams.
The graphic t-shirts featuring Pikachu, Frozen's Elsa, Barbie and the Lion King, at a retailer targeting sophisticated 20-year olds, perfectly illustrate Wet Seal's decade-long struggle to figure out who its core customer is. It's a struggle that could soon end in the company's bankruptcy.
Wet Seal, which was among the hottest teen retailers in the 90s and early 2000s, is the latest chain running out of reasons to exist. It announced in a quarterly filing this month that based on recent losses, “there is substantial doubt about our ability to continue as a going concern.” Its stock closed Friday at 5 cents a share, after announcing late Thursday that its executive overseeing stores and operations will resign on Jan. 2. Its lender, Bank of America, has tightened the reins, keeping a close eye on its cash levels.
Wet Seal, which brought back its old CEO this past September in a last-ditch turnaround attempt, has been bleeding cash and losing customers in recent years as executives keep changing their mind about who they're selling to. Management has struggled to prove they understand the changing face of the American teen market, a fact highlighted by a troubling lawsuit, settled last year, that alleged the company sought to hire more white retail staff to achieve the “diversity” needed to reach its target market.
The retailer's newly-installed executive team says it finally has it right: earlier this month, Wet Seal's CEO said it wants to become “sexy” and “edgy” again, market to 18- to 24-year-olds rather than 13- to 23-year olds, bring back the old Contempo Casuals label and get out of “juvenile” graphic T-s.
But those changes won't really hit until this spring, and Wet Seal is in extremely tight financial straits during a sluggish holiday shopping season. Adding to that, the liquidations of rivals DEB and Delia's are intensifying mall competition this month, as those retailers clear out dirt-cheap inventory and lure customers in with giant “Going out of Business” signs.
“It sounds like the current management team, which was the old management team, really believes in this sexy, more sophisticated look and believes the customer target got too young and too basic,” Liz Dunn, founder and CEO of retail consulting firm Talmage Advisors, tells BuzzFeed News. “They want to interject more fashion as quickly as they can, and raise the level of sophistication. I just don't know if they have enough time, and with the stock at 5 cents the market's kind of goading.”
Wet Seal's spokesperson and CFO, both contacts on recent press releases, are no longer with the company. A message left at interim CFO Thomas Hillebrandt's office was not immediately returned. The company's receptionist wouldn't give provide an e-mail address to send questions to.