Wet Seal Bankruptcy - After a difficult holiday season for retailers in the erratic teen clothing industry, iconic retailer Wet Seal has filed for Chapter 11 bankruptcy protection.

The Foothill Ranch, Calif company filed for bankruptcy on Friday after a week of trying to stay afloat by laying off about 3,700 employees and shutting down 338 - two-thirds of its - stores.

Reports indicate that following Wet Seal's bankruptcy announcement, the company's shares dropped from 48.9% to four cents a share.

"After careful consideration, the Board of Directors unanimously concluded that filing for Chapter 11 was the appropriate course of action for the company," Chief Excusive Ed Thomas said in a statement.  "Overall, we continue to believe in The Wet Seal and remain committed to executing on the strategic steps that we already started."

Wet Seal is not the only teen retailer struggling with changes in the market. In December, teen clothing retailers Deb Stores and Delia's Inc. also filed for Chapter 11 bankruptcy.

The industry is struggling as more teens buy clothes online instead of going to brick and mortar stores. Additionally, teens seem to be more interested in buying the latest gadgets than new clothing.

Although Wet Seal has filed for bankruptcy, the Orange County retailer has also reached a loan deal with B. Riley Financial Inc, and as such intends to continue operations focusing on e-commerce and it's 173 stores that have performed strongest.

Apart from its online stores, Wet Seal currently operates in 42 states in the U.S. and also in Puerto Rico.

"We are pleased to provide financial assistance to The Wet Seal in it's efforts to revive this iconic fashion retailer," B. Riley Financial Chairman Bryant Riley said in a statement. "Taking a collaborative approach, and tapping our vast array of financial services, we believe that we have developed a financial solution that should benefit all parties involved."

The B. Riley funding agreement, which would see the company become Wet Seal's majority stockholder, has not been yet been approved by the court.