LOS ANGELES — Clothestime has once again found a lifeline.
This story first appeared in the February 6, 2003 issue of WWD. Subscribe Today.
The beleaguered, 250-unit apparel chain is under new ownership, with a fresh turnaround strategy. JM Associates, an apparel manufacturer in New York, has bought Clothestime’s assets and liabilities in a stock deal geared to infuse new capital into the roughly $150 million company and return it to its roots as a seller of junior fashions at rock-bottom prices.
Terms of the deal were not revealed.
Company officials said senior management will stay put, as will the Anaheim headquarters, and no layoffs are planned for its 2,000 employees. JM Associates owner Mark Stern is the new chief executive officer, sharing chairman duties with former ceo David Sejpal. Bob Klausner and Douglas Periera will remain as executive vice president of merchandising and marketing, and executive vice president of finance, respectively.
“As we approach our 30th anniversary, we have a renewed focus: juniors fashions at a price,” Sejpal said. “We have a minimum sales growth target of 30 percent a year for the next three years.”
Sejpal said the company’s immediate focus is remodeling stores, stocking them with mostly private label merchandise priced from $10 to $25 and adding categories such as cosmetics and shoes. The aggressive strategy also calls for 100 new stores in the next nine months, with locations sought at strip centers and malls, a departure for the company.
Clothestime will split its retail operations with Clothestime stores carrying mostly private label merchandise and Eye Candy stores, a three-year-old format stocking more branded merchandise, retailing for up to $30.
JM Associates operates at a dozen or so factories in Mexico and China, and expects the company’s vertical integration to speed up delivery and stock replenishment. The move was a last-ditch effort to revive the struggling retailer. Some vendors, including Bongo jeans, stopped shipping product in October 2002, and even took on the role of financier.
“I would be stunned if they’re getting $150 million. I don’t think you’re going to see a one-to-one sales-to-price model,” said Liz Pierce, retail analyst at Wedbush Morgan Securities in Los Angeles. “Currently, junior apparel companies are trading at 13 times next year’s earnings.”