ClothesTime Stock Drops as Rumor Persists

ClothesTime Inc. stock continued its downward movement Friday, despite statements by the company intended to debunk rumors of a secondary stock offering that the firm blames for driving the stock down by 18.8% for the week.

On Tuesday, the Anaheim clothing retailer denied the rumors of a stock offering, but investors continued to dump their stock, forcing the company to issue a second statement Friday that again stated that no offering was planned.

Traded on the over-the-counter market, ClothesTime stock closed at $22.75 a share Friday, down $4.45 for the week on volume of 111,490 shares for the week.

“It’s been quite a week for us,” said Steve Schweickert, ClothesTime’s controller. He said that despite calls to brokers and analysts across the country, the rumors have persisted.

With anticipated earnings gains for 1985 that are expected to keep up with the first three quarters, when profits jumped to $8.6 million, compared to $2.7 million a year earlier, ClothesTime does not need the cash an offering would raise, he said.

Schweickert said Friday that analysts’ forecasts that the company would earn $1.50 to $1.55 a share for the year ending Jan. 26 are reasonable.

Although ClothesTime has not yet “zeroed in” on the source of the rumors, Schweickert said it is likely that they originated outside the firm. “I don’t believe that it was anyone inside the company who started that rumor. It would behoove no one to do such a thing,” he said.