ClothesTime Posts Higher Income : Anaheim Firm Again Targets ‘Young-Minded’ Women
Turning away from the tailored career look and returning to its niche of specializing in casual styles for fashion-minded young women, ClothesTime of Anaheim racked up third quarter net income of $3.4 million, more than quadrupling the $829,000 it earned for the same quarter a year ago.
Sales for the fiscal 1986 third quarter, ended Oct. 27, were $34.5 million, up 37% from $25 million in the year-ago period.
ClothesTime, which operates 170 women’s apparel stores in the western United States and plans to open 19 more this week--including its first outlets in Oregon, Louisiana, Georgia and Florida--has experienced a sales turnaround since the start of the fiscal year. In the last nine months, its net income increased 213% to $8.6 million from $2.7 million, while sales jumped 36% to $97.7 million from $72 million.
William W. Mowbray, ClothesTime’s senior vice president and chief financial officer, and F. Hardy Bowen, senior vice president at the New York investment brokerage A&S; Bleichroeder, attributed ClothesTime’s dramatically improved performance in part to an industrywide retail revival and to the introduction of hot new styles, compared to a dearth of new designs last year.
They said the latest fashions--such as stirrup pants, oversize sweaters, prints and silky looking jackets--have special appeal to the “young-minded” woman shopper, age 14 to mid 40s, at whom ClothesTime is aiming its promotional efforts.
Mowbray said the company early this year abandoned an unsuccessful 18-month campaign to start merchandising dressier clothes for career women.
“We probably didn’t understand the missy market” for career women, Mowbray conceded. “We are getting back to the junior customer who has been our real bread and butter over the years.”
Mowbray said ClothesTime has been able to increase its gross margin (the markup on clothing after discounts) to 46% from 38% and at the same time offer shoppers lower prices than many of its competitors by buying private brands rather than the more expensive national labels.
“The company is buying merchandise more cheaply than a year ago,” analyst Bowen said. He pointed out that ClothesTime is purchasing clothes that were stitched in places like Peru and Bangladesh, where seamstress labor is less expensive than in Hong Kong, home of much of the clothing in the lines ClothesTime previously carried.
Mowbray said ClothesTime’s market research has shown that its typical customer isn’t label conscious. “As long as she has the fashion, quality and good price, she doesn’t care about the label,” he suggested.
In addition, Mowbray said, ClothesTime has benefited from the implementation of a belt-tightening program throughout its operations that has reduced expenses by 2% so far this year.
