5 Reasons Why Teen Retailer Wet Seal Is Failing

Facebook/Wet Seal

Former teen retail giant Wet Seal is facing some financial woes. 

The company is bleeding cash, and sales have declined for 11 of the past 12 quarters.

If business doesn't improve, the company could soon be headed for bankruptcy, Buzzfeed Reports.

Here's why Wet Seal is struggling.

1. The company doesn't know its target customer.

The brand's clothing fails to adhere to a consistent theme, Buzzfeed's Sapna Maheshwari writes. There are shirts with "nasty gal" printed across the chest and graphic tees with cartoon characters, as well as simple basics and more bohemian attire.

From the product offerings, it's unclear who the store is targeting. 

Company management also appears to be confused about the store's target customer. Executives have changed their target age range multiple times over the past decade, going from young teens to 22-year-olds, then to 17-19-year-olds, and eventually returning to young teens again, according to Buzzfeed.

2. Competition is fierce.

Wet Seal was at it its peak in the late '90s and early 2000s, when it offered edgy clothing and contemporary basics as an affordable option to higher-priced retailers. Since then, retailers like Forever 21, Zara and H&M have become more ubiquitous and popular with young adults, as these "fast-fashion" brands bring runway trends to storefronts in a matter of weeks at more affordable prices.

3. Leadership is strained.

In 2012, Wet Seal fired its CEO Susan McGalla after just 11 months. John Goodman took over, but he was replaced in September by returning CEO Edmond Thomas, who had left the company back in 2011. It's no wonder that the company has struggled to find its voice.

4. The company has faced allegations of racism.

In 2013, the company had to pay a fine of $ 7.5 million after it was accused of firing black employees and hiring blond-haired, blue-eyed women to represent the front of the stores. 

5. Other major teen stores are closing, too.

In December, former teen apparel giant dELIA*s filed for bankruptcy. Just prior to that, Deb Shops filed for bankruptcy for a second time. A trend in liquidating stores might push Wet Seal to go bankrupt sooner than later.