FINANCE

Wet Seal to phase out Arden B banner

BY Dan Berthiaume

Foothill Ranch, Calif. – The Wet Seal Inc. will begin winding down its Arden B brand. Arden B currently operates 54 mall-based stores and an e-commerce website.

In fiscal 2013, Arden B generated net sales of $60.4 million and represented 11% of consolidated net sales. Thirty-one Arden B locations will transition to Wet Seal Plus merchandise and the remaining 23 locations will transition from Arden B to Wet Seal merchandise. Where permissible, Arden B locations will be refreshed with either Wet Seal or Wet Seal Plus signage. The company expects to complete this conversion by the start of the back-to-school selling season in late July 2014.

Through lease expirations and the exercise of early termination provisions, the Company will close 15 Arden B locations through the remainder of fiscal 2014 and 16 Arden B locations in fiscal 2015. For the interim period while Arden B locations remain open, the stores will offer Wet Seal or Wet Seal Plus merchandise, as noted above.

Effective immediately, the Wet Seal merchandising organization assumes responsibility for Arden B stores. The buying, planning and allocation team for Arden B will be impacted by the wind-down. The release of some team members and reduction in other expenses will result in annualized pre-tax cost savings of approximately $1.3 million beginning in the second quarter of fiscal 2014.

Wet Seal expects to incur approximately $100,000 of charges for severance costs in the first quarter of fiscal 2014 and approximately $300,000 of charges for store employee retention programs in the second and third quarters of fiscal 2014. The company also anticipates non-cash asset impairment charges of up to approximately $3 million in the first quarter of fiscal 2014 pertaining to Arden B store assets. In addition, the exercise of early lease termination provisions in fiscal years 2014 and 2015 is expected to result in approximately $500,000 of payments related to unamortized tenant allowances. Wet Seal intends to negotiate with landlords and pursue other alternatives to expedite the transition and exit of the remaining 23 Arden B locations where leases do not expire prior to its fiscal 2015 year end.

“This was a difficult decision that followed a comprehensive review of the business and market dynamics,” said John D. Goodman, CEO. “We would like to thank all of our Arden B team members for their hard work and dedication to the brand, and also extend our gratitude to our loyal customers.”

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OPERATIONS

DSGE shuts down Southern Bullion

BY Dan Berthiaume

Dallas – DGSE Companies Inc. has closed all locations in its Southern Bullion Coin and Jewelry division. As previously disclosed, six Southern Bullion locations were closed in February, and subsequently, four additional locations were closed in early April, and the final 13 locations were closed on or about April 21, 2014.

Following these actions, DGSE Companies will continue to operate 12 retail locations, including nine Dallas Gold & Silver Exchange locations in Texas, one Bullion Express location in Illinois, and two Charleston Gold & Diamond Exchange locations in South Carolina along with Fairchild International, the company’s wholesale watch division.

The Southern Bullion division will be reclassified as discontinued operations. During 2013, these discontinued operations generated a net loss of approximately $1.9 million. Management believes that closing these locations will result in profitable continuing operations on an annualized basis.

DSGE expects to report approximately $3.7 million in 2014 in non-recurring charges related to these closures. This includes approximately $2.9 million in expected write-offs related to the Southern Bullion trade name, approximately $400,000 in expected fixed asset write-downs, and approximately $500,000 in expected lease termination expenses, severance payments and other related costs. The inventory from the Southern Bullion locations will be utilized throughout the company’s remaining 12 locations.

“Closing Southern Bullion was a necessary decision, as these locations represented approximately 20% of our revenue, but approximately 70% of our operating loss,” said Dusty Clem, chairman and CEO of DGSE Companies. “The significant change in the precious metal markets, including a 30% decline in the spot price of gold, had a disproportionately negative impact on the customer traffic, transactional volume and ultimately the profitability of the Southern Bullion division. These stores were unable to make the transition from gold-buying shops to the full exchange model that characterizes our successful operations in Dallas, Charleston and Chicago.”

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MARKETING/SOCIAL MEDIA

GNC launches new omni-channel brand campaign

BY Dan Berthiaume

Pittsburgh – GNC Holdings Inc. is launching a new national brand campaign: "Beat Average." The campaign is designed to open a conversation with health-and-wellness consumers about their daily personal wellness goals and how GNC can be their ongoing partner and ally in beating average.

Developed by Carmichael Lynch, its agency of record, the campaign will debut globally in GNC’s 8,500 stores on April 25 and will premiere during network prime time on May 3. The campaign includes a mix of network prime, premium and targeted cable, out of home, newspaper, magazine and online media.

"Since 1935, we have been committed to being above average in our products, stores and customer service,” said Joseph Fortunato, chairman, president and CEO, GNC Holdings, “Our array of superior products can meet a wide range of individual needs. This campaign is grounded in GNC’s DNA and establishes ‘average’ as a common enemy we all can relate to when it comes to health and wellness. No matter who you are, average is in all of us and GNC is here to encourage everyone to "Beat Average" in regards to achieving their overall wellness goals and helping to celebrate their successes."

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