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Foothill Ranch-based retailer Wet Seal Inc. criticized a shareholder’s attempt to replace its board.
The comments came in a letter sent to shareholders yesterday, a day after two independent proxy advisors issued opinions against New York-based asset management firm Clinton Group Inc.’s call for a complete board overhaul.
One advisory firm, Institutional Shareholder Services, suggested that Wet Seal should appoint two of Clinton Group's nominees to replace two existing board members.
Clinton Group, which has a 6.9% share of Wet Seal stock, filed documents with the Securities and Exchange Commission earlier this month to seek written consent from other shareholders to remove and replace four Wet Seal board members and fill a vacant seat, all with its own nominees.
Wet Seal said in its letter to shareholders that Clinton Group is focused on “short-term activism rather than the long-term interests of all shareholders.”
The company went on to criticize the lack of a specific strategy from Clinton Group or any of its proposed board nominees board seats at the chain, which has seen a sales slump so far this year amidst a turnaround several years in the making.
Wet Seal said it believes its return to a fast-fashion strategy will help put the company back on track, along with last week’s board additions in former Wet Seal Chief Executive Kathy Bronstein and former Charlotte Russe Inc. Chief Executive John Goodman.
“We are confident that in the upcoming quarters you will see the significant financial impact of this board’s focus and stewardship,” the board said in its letter to shareholders.
The letter also criticized the Clinton Group nominees, pointing out a lack of teen retail or fast-fashion experience in some cases or lack of merchandising or recent operational experience in others.
Clinton’s nominees include Mindy Meads, a former chief executive of New York-based retailer Aeropostale Inc.; John Mills, a former chief operating office of Aeropostale; Dorrit Bern, former chief executive of Charming Shoppes Inc. in Pennsylvania; Raphael Benaroya, former chairman and chief executive of United Retail Group in Rochelle Park, N.J.; and Lynda Davey, co-founder and chief executive of investment bank Avalon Group in New York.
Wet Seal operates 469 Wet Seal stores for teen girls and 82 Arden B stores for young women, and had $620.1 million in revenue for the 12 months through January.