We found out this morning what happened to Greg Scott, who left women's apparel retailer Wet Seal's (NASDAQ:WTSLA) Arden B division in January: The former Liz Claiborne (NYSE:LIZ), Ann Taylor (NYSE:ANN), and Limited (NYSE:LTD) executive will become CEO of bebe stores (NASDAQ:BEBE).

The move looks like a good one for Scott, but illustrates the continued difficulties in recent periods for Wet Seal. Arden B, after all, has been one of the company's better performers lately.

Upper management, meanwhile, has been largely overhauled since mid-2003. In early January, the retailer gave up on its Zutopia line of stores for girls age 5-12, which it purchased in early 2001 from Gymboree (NASDAQ:GYMB) and then tried to grow somewhat. Wet Seal will write down the chain, which suffered in a difficult market environment, when it reports full fourth-quarter results in mid-March.

And earlier this month, management announced that fiscal fourth-quarter (ended Jan. 31) revenues fell year over year to $148.3 million from $161.2 million as same-store sales dropped nearly 10%. For the year, meanwhile, same-store sales fell a remarkable 16.3% on top of last year's 5.6% decline. Significant losses, which include a settlement to pay off store managers who sued for unpaid overtime, are expected for the fourth quarter.

Despite all the recent woes, however, Wet Seal sits in an interesting position. While clear-cut turnaround signs aren't plainly obvious in this case, the company says painful markdowns have helped clear out inventory and make room for spring merchandise. Management is optimistic that it will be able to improve same-store sales and turn in a better performance in this year's back-to-school season.

With no long-term debt eating into profits, Wet Seal's recent history has shown that it's capable of generating free cash flow. It's this combination of factors that seem to be keeping the shares out of freefall -- though they have underperformed the S&P 500 over the last 12 months.

Share your thoughts on the prospects of a turnaround on our Wet Seal discussion board.

Fool contributor Dave Marino-Nachison doesn't own any of the companies in this article. He can be reached via email.