Clothestime Reports Record 2nd-Quarter Profit
The budget women’s clothing business has generally been kind to Clothestime Inc. during the past 15 or so years: Sales and profits have steadily increased; its stores have continued to crop up across the Western United States and shareholders have seen the stock outperform the rest of the retailing industry.
And when the Anaheim-based retailer became even more of a budget store--dropping its prices further in March--its performance improved still more.
Monday, Clothestime announced record second-quarter profits of $3.8 million, nearly three times the $1.4 million reported last year. Sales for the period ended July 28 jumped 37% to $35.6 million from $25.9 million the year before.
The announcement comes just days after national retailers posted lackluster sales for July and warned that the rest of 1985 could be hard on the industry because of apparent increasing consumer reluctance to take on additional debt.
However, Clothestime executives have found that consumers are willing to spend--if the price is right.
“When we lowered our price points (the cost and type of merchandise), the consumer really responded,” explained William Mowbray, Clothestime’s vice president for finance.
Mowbray said the company late last year noticed a decided swing away from the discount-priced designer label clothing that its stores had been carrying and attributed the shift to “overkill.”
“Customers aren’t looking for Jordache jeans anymore,” he said. “Not when they can find them at almost any corner gas station.”
In addition to focusing on lower-priced merchandise, Mowbray said, the company has decided to drop its attempts to expand its customer base to “older” women. He said buying styles for women in their 30s “took too many resources” and detracted from the company’s primary market of teen-agers and women up to about age 25.
The moves combined to help Clothestime post record sales and profits for the first half of the 1986 fiscal year. Profits jumped nearly three times to $5.2 million from $1.9 million last year while sales increased 35% to $63.2 million from $46.9 million a year ago.
