Clothestime Posts Huge Income Jump

Clothestime Inc. rode out the long recession with its policy of discounting fashionable young women’s clothing, posting fiscal-year net income of $5.5 million, or 37 cents a share.

The earnings for the year ended Jan. 25 eclipsed the meager $78,000, or 1 cent per share, the apparel chain reported for its fiscal 1991.

The retailer’s revenue also soared, rising 24% to $259 million from $209 million the previous fiscal year.

“This has been a turnaround year for the company,” said William R. Rankin, a research analyst with the Smith Growth Equities brokerage in San Francisco. “This should be the beginning of continued years of strong earnings growth.”

For its fourth fiscal quarter, Clothestime reported net income of $1.4 million, or 9 cents a share, up from earnings of $61,000, or 1 cent a share, the previous fourth quarter. Revenue for the fiscal 1991 final period jumped 25% to $71 million from $56.6 million.

Rankin said that many retailers have had a rough time during the past four years and that Clothestime has had an “enormous amount of problems” since it hit its earnings peak of $11 million for the fiscal year ended Jan. 25, 1987.

Marketing costs gobbled up operating income in previous years as Clothestime relied heavily on television advertising campaigns.

Then the company began concentrating on offering name-brand apparel at inexpensive prices, and customers didn’t need many ads to tell them where they could find good deals. That allowed the company to keep its marketing costs under control, Rankin said.

Clothestime returned to its cut-rate basics and began showing improvement every quarter last year. The company offers primarily in-season, moderately priced sportswear, dresses and accessories, emphasizing brand names at discounts from the more upscale department and specialty stores.

Clothestime began opening new stores last year, ending its fiscal year with 401 women’s apparel stores in 16 states.