Ad Executives Back Client Clothestime by Buying Shares
Two Los Angeles advertising executives are putting their money where their commercials are--Clothestime Inc.
Jack Roth and Robert Recht, president and chairman respectively of Los Angeles-based Admarketing Inc., are leading a group of investors who have acquired a 6.35% stake in the Anaheim-based discount retail chain that sells women’s clothing.
The group purchased almost 748,500 shares between Sept. 20 and Nov. 9, according to a Security and Exchange Commission filing released this week. The group now holds 895,000 shares of Clothestime, making it the company’s third largest stockholder.
Admarketing, one of the largest ad agencies in Los Angeles, has handled Clothestime’s advertising account for the past two years.
Roth said in a telephone interview that he bought the shares because he thinks Clothestime stock is a relative bargain. He added that he started buying shares in the company months ago at $3 and $4. The group bought its 748,500 shares at prices between $1.44 and $1.94.
Clothestime’s stock rallied 50 cents Tuesday to close at $2.375 in over-the-counter trading.
“We believe in the company and its future,” Roth said. “And the price was so low it appeared to be a good buy.”
Roth said he has invested heavily in other clients of his ad agency as well, including C&R; Clothiers and the Good Guys. He holds a smaller number of shares in Home Depot as well.
Clothestime’s low stock price reflects market worries about its performance and problems.
The company’s founder and chief executive, Michael DeAngelo, recently retired at age 41, and the company’s chief financial officer quit in September in the wake of projections of shrinking profits for the chain of 370 stores.
At that time, the company estimated its earnings for the fiscal year ended Jan. 26 at $140,000 to $702,000, far below some analysts’ earlier predictions that earnings could reach as high as $2.8 million. But last week Clothestime announced that its October sales were $13.3 million, a 10% increase over the same month last year, and that its sales for the first nine months of the year were $152.3 million, up 7% over the same period last year.
And the company was listed by Newport Securities recently as one of 15 Orange County companies whose shares are selling below book value because of “exaggerated pessimism” in the stock market.
Roth said he is fully aware of Clothestime’s past difficulties, but is hopeful it will make a turnaround. “They have learned both from the good things that have happened to them and from the bad,” he said.
And as far as investing goes, Roth said he’s wagering that Admarketing’s commercials will make his stake in Clothestime a good investment. “If you can’t bet on yourself,” he added, “who are you going to bet on?”
Clothestime officials could not be reached for comment about the stock purchase.
