UPDATE 2-Clinton Group says no longer seeking sale of Wet Seal
* Clinton Group seeks turnaround, wants new CEO
* Company appoints Clinton nominee as chairman of board
(Adds details, background) By Chris Peters
Oct 10 (Reuters) - Activist investor Clinton Group said it will no longer push for a sale of Wet Seal Inc , which it won control of last week, but will instead focus on turning around the women's clothing retailer.
The hedge fund, however, said Wet Seal could attract buyers if it managed to improve its business, and an offer of between $5-$8 per share would be a fair value for the company.
Clinton Group, which in June called for a sale of the retailer and is its third-largest shareholder with a 7 percent stake, said it is now hoping for a recovery under the new board.
Wet Seal named a Clinton Group nominee as chairman on Wednesday, days after it managed to get four nominees elected to the company's eight-member board. One seat remains vacant.
Lynn Davey, the new chairman, is the former chief executive of Avalon Group Ltd, and will replace Harold Kahn, who resigned following the Clinton Group's efforts to bring changes to the board.
Clinton Group Managing Director Greg Taxin said Wet Seal, which has been hit by declining sales, should focus on hiring a top-notch chief executive and improve its business before considering a sale.
The retailer, which caters primarily to young women, fired CEO Susan McGalla in July as Clinton Group stepped up pressure to turn around the business.
"There is no definitive time frame set for a turnaround," Taxin told Reuters on Tuesday, adding he expects the company to start showing progress in about six to nine months.
He said Clinton Group had pressed for a sale earlier as Wet Seal had fired its CEO without a replacement available and had "no clear strategic direction".
SEEKING A "FAST" REVAMP
Wet Seal has been trying to return to a fast-fashion model by maintaining light inventories to respond quickly to new styles and trends.
Wet Seal also announced late Friday merchandising chief Harriet Sustarsic would be leaving the company to assume a similar role at True Religion Apparel Inc .
Kim Bajrech and Debbie Shinn will lead Wet Seal's merchandising operations, a responsibility they previously shared on an interim basis during a relatively successful period under the company's fast-fashion model before Sustarsic's appointment.
Shares of the Foothill Ranch, California-based company, which have climbed 14 percent since it fired its CEO in July, were up 1 percent at $3.07 on the Nasdaq late morning on Wednesday.
(Reporting By Chris Peters, Ranjita Ganesan and Maria Ajit Thomas in Bangalore; Editing by Saumyadeb Chakrabarty and Sreejiraj Eluvangal)
Keywords: WETSEAL CLINTONGROUP/