Clothestime’s Chief, Financial Officer Quit : Management: The women’s apparel chain has been plagued with lower profits and plans to restructure its retail lines.
Clothestime Inc., a women’s apparel chain hit by shrinking profits, said Wednesday that its chairman and chief executive, Michael DeAngelo, has retired at age 41, and that the company’s chief financial officer has resigned.
Raymond DeAngelo, 38, Clothestime’s vice chairman and Michael’s brother, will assume the additional title of chief executive, the company said. John Ortega, a company co-founder and a former vice chairman, has been named chairman.
The Anaheim-based retailer also said Wednesday that it is estimating earnings for the year ending Jan. 26, 1991, at $140,000 to $702,000. Analysts had estimated that the year’s earnings would be as high as $2.8 million.
A Clothestime spokesman said the management changes are unrelated to the company’s financial problems.
But Edward F. Johnson, a retail analyst with Prescott, Ball & Turben in New York, said the changes indicate that Clothestime “has got trouble.”
Clothestime said Michael DeAngelo, a company co-founder, will remain as a director and continue to work part time on corporate strategy matters.
August DeAngelo and his sons, Michael and Raymond, together with Ortega founded the company in 1974.
Clothestime said John Shanklin resigned Friday as chief financial officer “to pursue other interests.” David Sejpal, a former Clothestime controller, was named acting chief financial officer.
Shanklin could not be reached for comment Wednesday.
Sejpal said he foresees a smooth transition for the new management team. “Clothestime has been run by committee, so all it means is you have the same cast of characters with one less person,” he said.
Clothestime, which operates 370 off-price clothing stores, has seen its earnings slip as it has marked down prices even further to boost sales in a sluggish retail environment.
For the first six months of fiscal 1991, ended July 28, the company’s sales rose 11.3% to $103.8 million, up from $93.2 million a year earlier. But earnings were down sharply to $100,000, from $2.4 million last year.
Sejpal said Clothestime plans to boost profits through a strategy of selling less expensive clothing but increasing the company’s profit margins on those items.
Frank Podbelsek, an analyst with Paine Webber in Los Angeles, said the changes are part of the company’s ongoing effort to reposition itself by renovating its stores, targeting older consumers and selling lower-cost clothing.
“Management has got to get this business to work,” Podbelsek said. “I don’t think it’s going to be a quick or easy turnaround.”
CLOTHESTIME PERFORMANCE
Clothestime Inc., the Anaheim-based retailer of women’s sportswear and accessories, has been struggling in the last two years to improve its financial performance.
Revenue (In thousands of dollars)
1986: $126.9
1987: $160.7
1988: $178.7
1989: $171.5
1990 (Projected): $187.6
Net Income (In thousands of dollars)
1986: $10.0
1987: $11.9
1988: $6.5
1989: --$2.7
1990 (Projected): $.5
Source: Clothestime Inc.
