Clinton Group Comments The Wet Seal, Inc. (WTSL)’s Performance; Edges Down the Stake

 Greg Taxin‘s Clinton Group has revealed, in a newly amended filing with the SEC, that it has further slightly reduced its position in The Wet Seal, Inc. (NASDAQ:WTSL). Wexford currently owns 6.24 million shares of the company, versus 6.43 million disclosed previously. The activist stake amasses 7.4% of the class A stock, slightly down from 7.6% held earlier. At the same time the fund disclosed a letter sent to the company’s management.

The Wet Seal, Inc. (NASDAQ:WTSL)

In the letter sent to the Chief Executive Officer of The Wet Seal, Inc. (NASDAQ:WTSL), Mr. John Goodman, the investor commented the financial results of the company that have been announced yesterday, on March 21, as well as the recent financing announcement disclosed by the company. The Wet Seal posted net sale of $530.1 million for the last fiscal year, versus $580.4 million in the fiscal 2012. The company reported a net loss of $0.45 per share, significantly down from $1.28 reported a year ago, and slightly down from the estimate of -$0.31 per share.

Clinton Group in its letter stated that it understands that the weak results disclosed by the company are caused mainly by the market forces, which will change to the best in future. The results of other companies from the industry of retail stores operators have also been weak, and even worse than those reported by Wet Seal.

“As Wet Seal’s competitors aim to be more like Wet Seal, we know that Wet Seal itself continues to evolve and remain ahead of the pack. Indeed, we believe you have made many smart moves in last fifteen months — improving merchandising, store operations, real estate strategy, technology, loyalty programs and the use of social media — that will keep you ahead of the competition even as they attempt to emulate the Wet Seal fast fashion model,” the letter stated.

The Wet Seal, Inc. (NASDAQ:WTSL) is also optimistic regarding its future performance. According to a statement, the company expects its net loss to climb to $0.16-$0.19 in the first quarter of its fiscal 2014. The company also plans to open 10 new stores and closed another 17 after the lease expires. Overall, The Wet Seal plans to have capital expenditures in the range of $10.5 to $11.5 million.

Moreover, in a separate press release, The Wet Seal, Inc. (NASDAQ:WTSL) disclosed about entering into an agreement with an institutional investor, under the terms of which, the company will issue $27 million worth of convertible notes and warrants for purchase of class A stock. The proceeds from the offering will be used for general corporate purposes.

Clinton Group commented the financing as well, stating that it will improve the company’s situation and will increase the confidence of suppliers. The shareholder also says that it is pleased with the management’s attempts to “address an altering landscape,” such as the building of stores with a large return of capital, and more focus on plus-sized clothing, as well as rationalizing stores in underperforming malls.

“With some additional spending by teenage girls, which is inevitable, the Company will emerge from this market downturn stronger and better than it was when the stock was at $5,” the letter concluded.

The full text of the letter can be accessed below:

Clinton Group’s Letter to The Wet Seal

Last week, Clinton Group revealed reducing its stake in The Wet Seal, Inc. (NASDAQ:WTSL) to 6.4 million class A shares, from 6.6 million held previously. Aside from Clinton Group, another shareholder of the company is Another fund holding  The Wet Seal, Inc. (NASDAQ:WTSL) is Cliff Asness‘ Aqr Capital Management, which owns 1.17 million shares, as at the end of 2013.

Disclosure: none

Recommended Reading:

Charles Davidson, Wexford Capital Sell More Shares of Diamondback Energy Inc (FANG)

Hedge Funds Shooting for the Starz (STRZA)

Hedge Funds Interested in Cole Real Estate Investments (COLE)

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 9 Most Dangerous Countries for Tourists to Visit

Reign of Terror: The 10 Most Ruthless Politicians in History

On the Move: The 10 Fastest Growing Businesses in 2015

Fast Money: The 10 Highest Paying Fast Food Restaurants

Mixing It Up: The 14 Best Music Mashups of 2014

Rito Pls Buff: The 10 Least Played Champions in LoL Season 4

10 Covers of Popular Songs that are Better than the Originals

Must See TV: The 9 Most Anticipated Shows of 2015

The 15 Biggest Box Office Bombs of All Time

10 Things The World Can’t Stand About Americans

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!