Wet Seal's Dizzying Dive

When I last looked at embattled girls' apparel retailer Wet Seal (Nasdaq: WTSLA  ) back in February, I suggested that scattered signs of operational progress, optimism for the back-to-school season, and a semirecent history of free cash flow generation might be holding the company's shares out of free fall.

Whatever was holding them up -- or trying to, anyway, as they continued to slide these past few months -- was ripped away with the passing of July into August. On August 3, the company named CEO Peter Whitford its chairman, relieving Irving Teitelbaum and "demoting" him to director. (Presumably, Teitelbaum's Canadian company's recent sale of more than 3 million Wet Seal shares might have influenced the decision.) Two days later, the company said Q2 sales from continuing operations fell to $106 million from $123 million the year before; same-store sales, meanwhile, dropped 11%.

Yesterday, the stock dumped another 28% on the news that its creative director quit. Coming in was someone with experience at Target (NYSE: TGT  ) to take up a new position as senior VP of stores and operations.

Frankly, it's difficult to see why investors would be disappointed when high-ranking Wet Seal executives leave. (They said goodbye to an old CFO earlier this year as well.) It's not as though their absence can make things much worse. The company is losing money, leaking cash, and looking more and more like a turnaround someone decided to take the keys out of and abandon on the highway.

It's going to take all kinds of new people (creative, operational, and everything else) to get this thing moving forward again. With the company's value now at just about $6 million above the value of its cash, equivalents, and short-term investments as of May 1 -- yes, $6 million for all of Wet Seal's operations, including 563 stores nationwide and the resilient Arden B concept -- it seems inevitable that some investors will start considering Wet Seal again... if they haven't all given up completely by now.

More Wet Seal?

• Waiting on Wet Seal
• Wet Seal's Slippery Slide
• Wet Seal's Struggles

Fool contributor Dave Marino-Nachison owns no shares in Wet Seal or Target.