Recent changes at Wet Seal Inc. will vastly improve the board and could change the direction of the struggling retailer's business, a B. Riley & Co. analyst said.
THE OPINION: Wet Seal announced Friday that its chairman and three other directors would step down from the board following a proxy fight with activist investor The Clinton Group, which has been unhappy with the company's performance. The board members will be replaced by four of Clinton Group's nominees.
The company also announced that its chief merchandising offing officer was leaving the company for a job at True Religion Apparel Inc.
Analyst Jeff Van Sinderen said Clinton Group had overwhelming support to remove the four incumbents, although some shareholders wanted two of the members to stay. He said that while not ideal, the new board is vastly improved and he expects the recently appointed members to hit the ground running.
"Now the hard work of rebuilding the management team and executing the fundamental turnaround begins," Van Sinderen said in his note.
The velocity of the turnaround at the company will depend, on who is put in place as the new CEO, Van Sinderen said. Wet Seal fired its CEO in July amid sliding sales.
THE STOCK: Wet Seal's stock fell 2 cents to $3.12 in afternoon trading.
Van Sinderen maintained his "Buy" rating on the company's shares and a $3.90 price target.
The company's shares have traded between $2.42 and $4.63 in the past 52 weeks.