Person to Watch: SUSAN MCGALLA
Susan McGalla became one to watch after she took a big gamble and set out to turn around Foothill Ranch-based teen- and contemporary apparel retailer Wet Seal Inc. by building its brands with a move away from heavy discounting and fast-fashion.
It was a long-term strategy in retail industry terms, and Wet Seal’s sales declined steadily this year as McGalla’s recently assembled executive team took shape and research intended to lay a strategic groundwork proceeded. She spent most of her time in the first year on the namesake Wet Seal chain’s more than 400 stores, which focus on teens and bring in most of its sales, which topped $600 million last year. That left Arden B and its 80 or so stores with little direction.
The second year of McGalla’s turnaround bid was seen as critical, and analysts and other company watchers grew antsy with the pace. It ended when Wet Seal fired McGalla in July.
A high-profile proxy battle followed her ouster, as major Wet Seal shareholder Clinton Group Inc. tried to remove four board members. October saw the departure of Chairman Hal Kahn along with three other board members, all replaced by Clinton Group nominees.
Wet Seal since has returned to a fast-fashion strategy as it continues its search for a new chief executive.
—Kari Hamanaka
Company to Watch: PACIFIC SUNWEAR OF CALIFORNIA INC.
Action-sports retailer Pacific Sunwear of California Inc. signaled it was serious about right-siding its business at the end of last year, when the company announced a plan to shutter up to 200 underperforming stores.
That followed a series of tactics rolled out over the past few years, including great emphasis on key action-sports brands on the men’s side and more fashionable women’s offerings.
The moves finally may be moving the dial in Pacific Sunwear’s direction: Same-store sales for both the men’s and women’s business were up in the quarter ended April 28—the first time that has happened since 2005.
The positive trend continued into the next quarter, with the men’s business marking a 7% spike in same-store sales in the biggest such increase since 2004.
The company continues to focus on big-name brands on the men’s side this year, while sticking with its Golden State of Mind marketing campaign.
Meantime, it has bumped the average age of its shoppers from mostly teens to college-aged consumers.
Still, for all the signs of traction, it’s a bit too early to declare the turnaround moves a success.
“I’ve learned it’s hard to put specific time frames to a turnaround,” Chief Executive Gary Schoenfeld acknowledged earlier this year. “[But] we’re all excited about what we think the future holds for PacSun.”
—Kari Hamanaka
5 Big Retail Stories
• The board of Foothill Ranch-based Wet Seal Inc. fired former Chief Executive Susan McGalla in July, a move followed by an activist investor’s calls to remove and replace four board members.
• Irvine-based Tilly’s Inc. launches an initial public offering in May, with 8 million shares priced at $15.50 per share. It was one of the largest IPOs seen in Orange County in several years.
• The parent of Billabong USA, Australia-based Billabong International Ltd., fends off takeover offers from at least two bidders this year. Now, Billabong’s Americas president is eyeing a possible leveraged buyout of the action-sports company.
• Newport Beach-based Irvine Company’s $100 million renovation of Fashion Island has helped bring a new look and retail exclusives to the mall, helping position it as the city’s new downtown.
• Work begins on The Source, a nearly 500,000-square-foot mixed-use project in Buena Park, with the first phase of the project expected to be completed by fall 2014.
