Wet Seal Fires CEO

Teen and women’s retailer Wet Seal Inc. fired its Chief Executive Officer Susan McGalla Monday, and posted a lower profit guidance as the company revealed that sales were dramatically lower in July.

Hal Kahn, the company’s nonexecutive chairman of the board, will lead a search for a replacement, according to a statement from Wet Seal. The company did not elaborate the reason for McGalla’s firing.

The move likely has to do with the fact that Wet Seal reported a 13 to 14 percent decline in comparative same-store sales in July.

The California-based Wet Seal has recently struggled with its product mix and store performance, announcing 10 consecutive months of same-store sales declines. The company has about 550 stores in the United States.

For the current quarter, the company announced that it expects revenue declines of between 10 and 11 percent.

After the announcement Monday, New York-based asset manager Clinton Group—a key shareholder, which owns around 4.25 percent of Wet Seal’s total shares outstanding—criticized the company’s direction and said that it should instead sell itself.

“We simply cannot wait for the board to hire yet another chief executive—the next one will be the fourth in five years—to embark on yet another change in strategy with the aim of turning around the company,” wrote Clinton’s senior portfolio manager Joseph DePerio in a letter to the board, according a Bloomberg report.

DePerio said that instead the company should sell itself for between $5 and $8 per share.

Earlier this month, Wet Seal was accused by former employees of discrimination against black store managers because they did not fit with the image of the company, according to a lawsuit filed at the Federal District Court in Santa Ana, Calif. “Wet Seal is an equal opportunity employer with a very diverse workforce and customer base,” the company said in response. 

Wet Seal runs Arden B stores as well as its namesake stores, and competes in the same retail segment as Aeropostale and American Eagle Outfitters. 

Before joining Wet Seal, McGalla was a senior executive at American Eagle.