FOOTHILLS RANCH, Calif. (AP) -- The Wet Seal Inc. said Friday and its chief operating officer is stepping down as the struggling retailer implements a broad restructuring program.
Wet Seal also authorized a $25 million stock buyback program, cut 35 jobs and will close two money-losing Arden B stores at the end of its 2012 fiscal year.
President and Chief Operating Officer Ken Seipel resigned effective immediately after two years at Wet Seal, to pursue other professional opportunities. The company will not fill the COO position. Seipel's duties will be shared between CEO John Goodman and Steve Benrubi, its chief financial officer.
The moves are part of a broader reorganization as the teen clothing retailer tries to turn around its struggling business. The strategic plans outlined Friday are expected to save the company $5.5 million in its 2013 fiscal year.
Wet Seal, based in Foothills Ranch, Calif., is in the midst of a number of changes. It fired former CEO Susan McGalla in July amid falling sales and hired retail-industry veteran Goodman in January to help refocus the company.
The retailer has been struggling for some time due to a selection at stores that didn't intrigue fickle teen shoppers. It also has faced a proxy battle with a key investment group that is unhappy with its financial performance.
Wet Seal said the job reductions and elimination of the chief operating position will save it an estimated $3.8 million annually beginning in its 2013 fiscal year. The company expects to record a one-time charge of $1.3 million in its fourth quarter for severance charges.
Wet Seal is facing some added costs as well. The company expects to pay $2 million in legal fees in 2013 over an employment-related lawsuit that arose in 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 roughly $1.9 million a year.
While the company did not specify the exact nature of the legal matters, it is known that three former employees of Wet Seal filed a federal racial discrimination lawsuit against the teen clothing store operator in July, claiming management set out to fire African-American employees because they didn't fit the retailer's "brand image." The former employees said that from 2008 on the company had a practice of discriminating against African-American store management employees at its namesake stores as well as its Arden B shops.
The company has denied the allegations. A representative for Wet Seal could not be reached immediately Friday for comment.
Wet Seal also said its board authorized a $25 million share repurchase program. Companies often buy back shares when they feel that their stock is undervalued to boost the price of the remaining shares.
Wet Seal shares fell 3 cents to close at $2.77.