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Cover Story: WET SEAL
STAMPED WITH THE TEEN SEAL OF APPROVAL
First: the name. No one is really sure why the juniors' apparel chain is called Wet Seal Inc. Chief Executive Ken Chilvers says founder Lorne Huycke took his cue from the "wet look" that was popular in swimsuits in the mid-1960s, when he named his Newport Beach (Calif.) beachwear shop. "I should just make up a good story," Chilvers jokes.
No need: The company's hip style has won the teen seal of approval. Over the past seven years, sales at the retailer, based in Irvine, Calif., have soared 872%. And despite war and recession, its trendy clothes, sold in shopping malls, pulled in $107 million last year, up 36.5% from 1989, with profits of $7.2 million. Much of Wet Seal's growth comes from new store openings, but existing stores are also posting solid gains.
The 97-store chain, with outlets in Arizona, California, Florida, and Hawaii, has exploded, thanks to a combination of savvy merchandising and splashy store design. Most of that growth has come since 1984, when Suzy Shier Inc., a Toronto-based women's apparel chain, bought the 18-store Wet Seal operation from its managers. Chilvers, a Shier executive, helped engineer its expansion and took it public last summer with a $37 million stock offering.
Despite the fast growth, Wet Seal has stayed close to its origins as a trendy shop catering to the California beach crowd. Marketing director Kathy Bronstein stocks Wet Seal with colorful sportswear sold at moderate prices. Wet Seal's small size and reliance on local suppliers allows it to respond quickly to the fickle demands of fashion-conscious teens. It needs less than six weeks to get a new design into stores, compared with four months for companies that use Asian suppliers.
NEAR THE TOP. Wet Seal showcases its flowered denim shorts, brightly colored sweaters, and other funky fashions in sleek, industrial-modern stores with faux skylights and spotlights. Clothing is arranged on high-tech wire mannequins or wall displays, and browsers are bombarded by shows on giant video screens and concert-quality sound systems. "They're usually one of the top stores in a mall for ambience and glitz," says Gregg Sloate, an analyst at Seidler Amdec Securities Inc. in Los Angeles.
Glitzy, yes. But Wet Seal isn't immune to the retail slump. Sales growth has slowed since last summer, when the Persian Gulf crisis began. With 80 stores in California, the chain has been hit especially hard by local defense-company layoffs, sinking real estate, and a decline in tourism. Chilvers says this year's sales will be solid, not spectacular. But he vows that Wet Seal won't change tactics: "The secret is to keep your strategy intact when you get into difficult times. We won't confuse our customer."
So far, Wet Seal has stuck to the Sunbelt, where its California look plays well. This year, it plans to add 20 stores, including two in Texas. If all goes according to plan, the store with the slick name will keep slipping into the nation's malls and making a big splash.Kathleen Kerwin in Los Angeles