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Teen clothing store Wet Seal follows sector trend, documents for insolvency
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Wet Seal Inc became the fourth US garments store to apply for bankruptcy in 2 months as the sector deals with growing competition and also lower spending by teen consumers.
The company claimed its shift away from fast-fashion clothes, unprofitable endeavors as well as a liquidity crisis due to weak sales and also changes in supplier credit score arrangements caused the bankruptcy.
Several teen apparel retailers have actually been having a hard time as clients switch to fast-fashion brand names such as H&M, Forever 21 and Inditex's Zara and online retailers such as Amazon.com Inc which supply deep discount rates.
Deb Shops declared insolvency on 4 December, adhered to a day after by Delia * s Inc. Mall-based garments store Body Central Corp also closed shop this month.
Damp Seal, which offers clothing as well as accessories for young females and teen girls, given up 3,700 employees as well as closed 338 shops last week. It had 7,413 employees a year ago.
Affected workers submitted a class-action claim on Thursday, charging Wet Seal of breaking the Worker Adjustment and Retraining Notification that needs companies to alert employees of impending mass discharges.
"Despite solid proof that Wet Seal was in high decrease, it proceeded to maintain its staff members unenlightened ... staff members were told not to search for various other tasks and that the stores were simply redesigning," the lawsuit claimed.
The plaintiffs sought 60 days' pay and also advantages.
Damp Seal and also its lawful lawyers were not immediately readily available for comment.
The business, which reported reducing sales growth for the previous 5 quarters, advised last month that it may declare insolvency defense if it fell short to resolve liquidity issues.
The firm said it received $20m in debtor-in-possession funding from B Riley Financial Inc. It intends to reorganize its business around shopping and also its continuing to be 173 stores.
Wet Seal, founded in 1962, provided assets of $10m--$50m and also responsibilities of $100m--$500m in its Chapter 11 personal bankruptcy declaring late on Thursday. It has actually hired FTI Consulting Inc as restructuring expert.
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