Clothestime Plans to Close 10 Stores, Bid for Older Shoppers
Clothestime, the struggling Anaheim-based discount chain that expanded rapidly by catering to the tastes and budgets of young women, plans to close 10 stores this year and revamp its image to reach an older, more affluent market.
The change in strategy comes amid a $2.2-million loss for the year ended Jan. 28. The loss, reported this week, included about $1 million set aside in the fourth quarter to pay for store closings.
The chain of 333 clothing stores said it has changed its merchandising and advertising strategy at its some 100 Southern California stores to emphasize better quality clothing for an older, career-oriented customer. Stores nationwide will be converted to an upscale look with advertising to match by later this year.
“We’re not abandoning a market, we’re expanding,” John Shanklin, Clothestime’s chief financial officer, said Tuesday.
Clothestime, which has been in business since 1974, courted a 12- to 29-year-old market by selling discount, brand-name junior fashions out of relatively low-rent strip mall locations. By fiscal 1986, that strategy had yielded earnings of $11.9 million.
Had to Follow Market
Since then, the company’s fortunes have suffered from a general slump in the retail clothing industry and the fickle tastes of their young buyer. Also, the size of that youth market has shrunk dramatically as the average age of American women has climbed.
To remain profitable, the firm has little choice but to follow an aging market, analysts said.
“That market made them successful. But it outgrew the stores,” said Thomas Tashjian, an analyst at Seidler Amdec Securities in Los Angeles.
Analysts said some of the company’s losses could have been avoided had the firm better anticipated the changing market.
“Clothestime expanded too rapidly and didn’t pay enough attention to its competition,” said Jack Seibald, a retailing analyst at Salomon Bros., a brokerage firm in New York. “It happens easily when things are going so well.
Analysts Optimistic
Seibald said Clothestime’s difficulty may also have come from its attempts to expand outside the markets it knows best--the West Coast and Southwest. Toward the end of its rapid expansion, the chain added stores in Wisconsin, Michigan and Virginia, where the more pronounced seasonal changes require different merchandising.
Analysts agree the chances are good that Clothestime can win back those women that abandoned the store as they grew older.
“But it may take some time for them to find their customers again,” said Sarah Stack, an analyst at Bateman Eichler, Hill Richards, a Los Angeles brokerage firm.
Seibald said that if the company’s plans work, Clothestime could earn $3.5 million this year. If it doesn’t work, “then they’ve got troubles,” he said.
