Wet Seal announces cost-cutting moves; COO resigns
Foothills Ranch, Calif. — The Wet Seal Inc. on Friday announced that its COO is resigning as the struggling retailer initiates a corporate workforce reduction as part of a broader cost-saving initiative. In other moves, it will shutter two poor-performing Arden B stores.
The struggling chain, which also authorized a $25 million stock buyback program, said president and COO Ken Seipel resigned effective immediately. His position will not be filled. Instead, Seipel’s duties will be shared between CEO John Goodman and CFO Steve Benrubi.
The Wet Seal said it cut 32 positions in its corporate offices and three in the field. The total workforce reductions, including the elimination of the COO position, are expected to result in annualized pre-tax savings of approximately $3.8 million beginning in fiscal 2013. The company expects to record a one-time charge of $1.3 million in its fourth quarter for severance charges.
The retailer also announced planned fiscal 2013 cost reductions of approximately $2.5 million for store labor through staffing efficiency measures and approximately $2.1 million for several other cost savings plans.
In addition to sagging sales, Wet Seal faces other challenges. It expects to pay $2 million in legal fees in 2013 over an employment-related lawsuit from prior years. It also announced plans, which it developed in collaboration with the U.S. Equal Employment Opportunity Commission, to improve its human resources training and development that will cost it approximate $1.9 million annually.
Duncan takes over as Supervalu chief
MINNEAPOLIS — Supervalu has named Sam Duncan president and CEO.
The move was part of an agreement with AB Acquisition LLC to sell five of its retail banners as well as with Symphony Investors LLC to conduct a tender offer for up to 30 percent of Supervalu’s outstanding common stock at a purchase price of $4.00 per share in cash. Both AB Acquisition LLC and Symphony Investors LLC are Cerberus Capital Management-led entities. Supervalu had previously announced that Duncan would assume the role of president and chief executive officer upon closing of the transaction. Former CEO Wayne Sales oversaw Supervalu’s review of strategic alternatives, and as executive chairman, will continue to have oversight over the completion of the transaction. At the closing of the transaction, Robert Miller, current president and CEO of Albertsons LLC, will become Supervalu’s non-executive chairman.
“Sam is a talented and respected executive with a wealth of industry experience,” said Sales. “The Board decided to install Sam as president and chief executive officer before the completion of our previously announced transaction so he can start refining and where appropriate implement plans for the business. I fully support this decision and look forward to working with Sam to ensure a smooth transition.”
Commenting on his appointment Duncan said, “Following January’s announcement, I have visited stores, spoken with many of our independent retailers and Save-a-Lot licensees, and met many team members. These activities have reinforced my belief that Supervalu has a bright future; and I’m excited to start putting in place plans to improve our results and increase shareholder value.”
Duncan, 61, most recently served from 2005 to 2011 as chairman, CEO and president of OfficeMax, the third-largest office supplies retailer in North America with over $7 billion in revenues and more than 1,000 stores in the United States, Mexico, Puerto Rico & the US Virgin Islands. Prior to joining OfficeMax, Duncan served from 2002 to 2005 as president and CEO of ShopKo Stores, a $3 billion Midwest retailer. In these roles, Duncan successfully led publicly-traded companies though growth and financial improvement efforts, resulting in stronger organizations and improved shareholder value. He has more than 40 years of experience in the retail industry, including nearly 30 years with Albertsons and Kroger in positions of increasing responsibility.
Iconix raises guidance on Buffalo buy
NEW YORK — Iconix Brand Group has gained a controlling stake of the apparel brand, Buffalo David Bitton from Buffalo International.
Iconix now owns 51% of the brand and as part of the deal, formed a new joint venture company with Buffalo International. Iconix will control this joint venture and consolidate its results. Buffalo International will be the core licensee for the new joint venture.
Founded in 1985, Buffalo is a lifestyle brand consisting of denim, sportswear, activewear, and accessories. Buffalo is primarily sold through better department stores including Macy’s, Dillard’s and Lord & Taylor, and has 30 stand-alone retail stores, mainly in Canada, operated by the core licensee.
Neil Cole, CEO, Iconix Brand Group, Inc., commented, "The Bitton brothers have built a powerful lifestyle brand. We look forward to leveraging our licensing and brand management expertise to further grow the business and expand its retail footprint in the U.S. and Canada, as well as internationally."
In relation to the acquisition, Iconix has raised its 2013 revenue guidanceto a range of $415 to $425 million from $395 to $405 million. The company is raising its 2013 non-GAAP diluted EPS guidance to a range of $2.00 to $2.10 from $1.85 to $1.95, and its 2013 GAAP diluted EPS guidance to a range of $1.90 to $2.00 from $1.75 to $1.85.