It’s Not Retail, It’s Resale
Every Monday morning, volunteers at the nonprofit Orangewood Boutique in Corona del Mar sort through a pile of closet rejects, from nondescript sweaters to never-worn Chanel jackets.
“Not a day goes by that we’re not amazed by what we receive,” said Pat Miller, the boutique’s assistant manager. “We’ll have ladies who have gone into Escada, found something they liked and bought one in each color, then decide they like one and not the other. They’ll donate the rest to us, and the clothes will still have the tags.”
With designer clothes costing hundreds or thousands of dollars, those cleaning out their closets often try to recoup their losses by getting money back on used threads. Many find, to their dismay, that even a pricey Donna Karan that never made it off the hanger has depreciated to a fraction of its original cost.
There are ways to increase the return on a too-tight skirt or tired sweater, but which methods work best depend on one’s time, style of dress and even tax bracket.
If one has invested in expensive designer clothing, it’s often worth the effort to sell the items.
“The advantage to selling your clothes is, you get money back, and we could all use money,” said Patsy Fowler, owner of Patsy’s Clothes Closet, a consignment store in Santa Ana.
Demand for used clothing has grown, and so has the number of stores that want castoffs. When she opened her shop, Fowler had scant competition. Now the Orange County Resale Network has 20 member shops.
“I’ve been in the business 26 years. In 1972, nobody would buy used clothing. Now everybody’s into it,” she said.
Garments don’t have to have a high-end designer label to become a hot commodity on the resale market. Grandfather’s old sweaters and Mom’s swing dresses have become sought-after styles at vintage clothing stores, such as Stray Cat and Geez Louise in Fullerton and Flashbacks in Orange.
Although charities take all castoffs, vintage clothing stores and consignment stores can afford to be choosy. Most resale shops ask that clothes be dry-cleaned or laundered, and they reject any with stains, holes or visible signs of wear.
Flashbacks sells clothes “in any decade but the current one,” says owner Nancy LaVariere. “The clothes have to be fun and cool. No mall clothes--we don’t want anything with a label from a store chain. People want vintage because the clothes are unique and the quality is better than the clothes made today.” The store is stuffed with men’s suits, trench coats, loud polyester shirts, ‘40s and ‘50s shirts and T-shirts, and women’s cardigan sweaters, cocktail dresses, jackets and disco clothes. Those who bring in old clothes receive either cash or a store credit.
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Upscale consignment stores such as Labels in Newport Beach accept only designer threads in near-perfect condition.
“We look for a recognizable label,” said Patricia Sytnyk, Labels owner. “We’re strict. The clothing has to be clean and ready to go on the floor, although I did have one woman who came in with a bunch of Escadas all rolled up in her trunk. We accepted those. But if we send them out to be pressed or dry-cleaned, the bill is deducted from your total.”
Labels, Patsy’s and other resale shops typically want clothes that are no more than 3 years old. They also want clothes in season.
“No one’s looking for a white pique dress in the fall,” Sytnyk said. “Right now we’re not taking anything white, although I did take a white Chanel, and we’ll take a wool Escada in the summer. There are exceptions.”
Once the clothes are accepted, stores issue a contract detailing what they’re going to sell and how long it will remain on the floor. Most give the customer an oral or written estimate of the clothes’ selling price.
“We have professional pricers who assign values to the clothing. We price a designer garment at about one-third the original cost, so a $900 Escada will be around $298,” Sytnyk said.
A few people take back their items when they learn what they’re worth.
“Some overestimate the value,” she said. “We know it won’t sell for what they want. But they usually go with our price. The majority just don’t want those things back.”
Most stores split the proceeds 60/40 with consignors, although a few divide the spoils in half. Stores usually issue checks monthly.
“A check for more than $2,000 is not unusual,” Sytnyk said. “A lot of people here are into fabulous clothes. They go to all the functions and don’t want to wear something two or three times.”
Clothes that don’t sell after the typical 30-day period can be reclaimed by the consignor or moved to the sale racks. Unsold articles usually get donated to a charity.
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Many people prefer to donate their clothes to charity instead of trying to sell them. It’s less work; the garments don’t have to be in marketable condition, and they can still get money for their clothes by deducting the donation on their tax returns.
“We get a lot of donations because people don’t want to be bothered. They don’t want to take the time to dry-clean their clothes,” said Sue Mulhearn, manager of the Orangewood Boutique. “One woman donated $18,000 worth of leather garments because she’d rather have the tax receipt. Another man whose wife died and who had no children donated $15,000 worth of jewelry.”
How much they reap from their donation depends on their income bracket.
Someone who pays 28% in federal taxes and 7% in state taxes and claims $2,000 in donations on the return would save about $700 in income taxes, said William Lewis, a certified public accountant with Client Valuation Services in Lincoln, Neb.
“If those same items were sold for $2,000 in a consignment shop that split the proceeds 60/40, the individual would get $800,” he said. “That sounds like a better deal, but that’s only if all the clothing sold immediately or sold at all. Whereas with [a donation] they can make an immediate donation and take an immediate deduction” by adjusting the withholding amount on their paycheck.
Charities provide only signed and dated receipts proving a donation was made, not itemized figures on the value of each article. The Internal Revenue Service says taxpayers must assign fair market value of their clothing.
Lewis has written a 56-page booklet, “Cash for Your Used Clothing,” that lists the value of 750 articles of clothing and household goods. The booklet is available for $25 by calling (800) 875-5927.
CVS estimates the value of used clothing by surveying consignment and thrift stores around the country, and Lewis stands by the numbers: CVS will pay any interest and penalties if the IRS disallows the deduction.
“Most people just guess at the value, and they usually guess low in fear of the IRS,” Lewis said.
A clothing donation usually won’t trigger an audit unless it’s excessive.
“If your income is $20,000 and you claimed $10,000, that would raise a red flag,” Lewis said. “We’ve only had 10 instances where the returns were audited.”
Taxpayers who claim more than $500 in noncash donations need to file Form 8283 detailing their contribution; if the amount exceeds $5,000, they need an outside appraiser to verify the value of the goods.
Aside from the tax benefits, donating clothes to charity helps the needy. The Assistance League thrift stores throughout Orange County support a variety of programs, including dental care for children.
Assistance League shops in Orange County: Anaheim, (714) 535-1336; Capistrano Valley, (714) 492-2800; Huntington Beach, (714) 847-6511; Fullerton, (714) 738-9172; Garden Grove, (714) 530-2340; Laguna Beach, (714) 494-5977; Newport Mesa, (714) 645-5477; Orange, (714) 532-5800; Santa Ana, (714) 543-1120; and Tustin, (714) 544-2612.
Orangewood Boutique supports the Orangewood Children’s Home in Orange for abused and neglected children who have been removed from their homes by the courts. Call (714) 760-6640.
Revenues from clothing donated to the Goodwill Industries of Orange County in Santa Ana provide job training, education, employment and other programs to people with disabilities.
“Aside from the tax receipt, there’s the value of giving,” said Joan Dornbach, spokeswoman for the local Goodwill.
Clothing ranks No. 1 among all donations to Goodwill. Last year 350,000 county residents donated clothing.
The charity funnels clothing delivered at its stores and 29 drop-off centers to a processing plant in Santa Ana. Goodwill also picks up clothing. Call (800) 4-GOODWILL.
Goodwill’s better brand-name items go to its consignment stores, Classic Closet in Irvine and Keepers in Lake Forest. Other wearable clothes--items that have all their buttons and are free of rips and stains--go to Goodwill stores. Rejects get sold for $1.99 a pound to the public at “as-is” sales at the plant.
Finally, wholesalers bid on entire cages filled with castoffs. They pick what they want, then usually turn around and sell what remains in other countries.
What the wholesalers reject is salvaged into rags. For the fashionable togs that once hung in a closet, that’s the end of the line.
Is It Worth It?
Estimated value of deduction taken for donated clothing items:
* Dress, long-sleeved: $35
* Skirt and jacket: $65
* Blouse, long-sleeved: $15
* Men’s two-piece suit: $60
* Men’s pullover sweater: $18
* Men’s dress slacks: $17.50
* Men’s dress shirt: $15
--Source: “Cash for Your Used Clothing,” 1997 edition.
