Retailer’s Generosity Drives Him Out of Business : Education: Owner of clothes shop offered gift certificates to students who got good grades. But he couldn’t afford to keep up with the overwhelming response.

Flanked by empty shelves and plastic signs promising “close-out” prices, Patrick Tatone spoke philosophically about the clothing giveaway he had designed to foster scholastic success.

Instead, the idea broke his heart--and his business.

“People didn’t understand the promotion,” said Tatone, 43, who owns Street Rags, a tiny shop on North Glendora Avenue that, until recently, sold casual school clothes. “They didn’t understand what it was all about. It was supposed to benefit the kids by encouraging them to do well in school.”

Street Rags, in business in Glendora since March, has closed its doors--the victim of a sagging economy and a promotion gone awry. Karen’s Creations, a young children’s clothing shop two doors down operated by Tatone’s wife, Karen, 31, also has closed.

The couple’s troubles began in May when Tatone decided to offer $50 gift certificates to all students, including collegians, in or outside the city, who earned a 4.0 grade-point average during the recent school quarter. He also offered $25 certificates to those who earned a 3.5 GPA or better, and $15 certificates to those earning 3.0. Students were required to produce report cards as proof.

Tatone placed a notice in his shop window announcing the offer; he also sent several notices to Goddard Middle School in Glendora with his son, Nicholas, now 14, who was a student there.

That was supposed to be it, but then the word got out--for example, a teacher at Sandburg, Glendora’s other middle school, announced the promotion--and the response was, to say the least, overwhelming. What the Tatones had intended to be a simple, word of mouth, reward for good scholarship wound up attracting thousands of students from throughout the region.

By the time the dust had settled, Tatone had given away $55,000 worth of clothes. He holds another $3,000 worth of receipts promising credit to those who collected on only a portion of their gift certificates. He has no way of knowing the value of the gift certificates that were never redeemed.

Many of the estimated 3,000 respondents came from neighboring communities to collect on the offer; some tried to pass photocopied, or altered report cards. Only a fraction of those who cashed in their gift certificates actually purchased any clothing at the store.

“It brought us down,” said Tatone, adding that the proliferation of discount stores in the area also contributed to his business problems. “I thought they would buy over the amount (of the gift certificate), but it never happened. I was definitely taken advantage of. Ninety percent of the people took advantage of us. The other 10% were outstanding customers.”

The offer, the merchant said, was designed to encourage education while promoting his new business. Instead, the promise of free clothing started the downfall of Street Rags.

“It was the match that started the fire,” Tatone said. “I had to borrow from Karen’s shop. Bringing me down brought both shops down. It created a situation we were unable to get out of.”

Glendora Unified School District Supt. Patrick Bushman, who six months ago applauded Tatone’s effort to promote education, expressed disappointment at the businessman’s plight.

“It is unfortunate to see any business forced to suspend operation, and I am particularly disappointed to learn of the closing of Street Rags,” he said.

The Tatones “instituted a very positive program to recognize and encourage academic excellence in this and neighboring school districts,” he said. “Their program provided an outstanding example of community support for education.”

Tim Allen, 12, a paying customer who redeemed a $15 gift certificate for his 3.0 GPA, agreed.

“It’s kind of sad that they’re closing,” said Allen, a seventh grader at Sandburg. “They tried to make a difference, but I guess that was their downfall.”

Tatone, who declined to reveal the size of his debt or whether he will initiate bankruptcy proceedings, said he harbors no ill will toward the city.

“I have a lot of great feelings about the community,” he said. “The kids have been a big factor in keeping us going. That’s the thing that we’ll miss the most.”

As he spoke, Tatone, who, through the years has supported numerous children’s activities in Glendora, peered over a near-empty cash till.

The merchant’s son, Jonathan, 18, stood quietly nearby. Does he consider his father a hero for helping the children of Glendora, or a villain for losing the family businesses?

“Both,” he said.

Indeed, the failure of the two stores has helped the Tatones decide that it is time to leave the area. They have plans to move to Washington state, where they will open another clothing store next summer. When asked whether he will offer similar promotions there, Tatone smiled.

“I will do things to encourage education,” he said. “Yes, I will do it again. Only I won’t do it as flamboyantly, or irresponsibly.”