CLOTHESTIME LOOKS AHEAD
Byline: Rich Wilner
NEW YORK — Although 1994 was an “ugly” year, and the red ink is expected to flow through the first half of 1995, Clothestime Inc. is getting its act together, says its chairman and chief executive officer.
“This is a 20-year-old company that hit a bump in the road in 1994,” said Clothestime ceo John Ortega. In an interview he cited several developments that could lead to a turnaround for the chain, which on Friday reported a loss of $8.51 million in the fourth quarter.
Spring inventory is turning faster this year, at a rate of 9.9 weeks compared to 10.8 weeks last year.
Leftover fall inventory is down $17 million from last year.
A new $40 million bank credit deal was signed last week.
A new vice president and general merchandise manager, Lynne Sperling, was hired.
“Her mandate will be to give the chain a whole new perspective,” Ortega said. Sperling, who held similar positions with Carter Hawley Hale, Robinson’s and Kaufmann’s during her 25-year career, will oversee Clothestime’s move to a merchandise mix catering to an older customer, more brands and casual workwear, Ortega noted.
Sperling has her work cut out for her. The fourth quarter loss was blamed on increased markdowns and merchandising errors, chiefly the slide to a younger apparel mix and some quality-control problems.
In the year ago quarter, the 569-unit off-price women’s specialty chain posted a profit of $2.06 million, or 14 cents per share. In the latest quarter, ended Jan. 28, comparable-store sales declined 18 percent. Total sales dropped 12.2 percent to $83.44 million from $95.06 million.
For the year, the Anaheim, Calif.-based retailer lost $11.24 million compared to profits of $8.17 million, or 56 cents. Revenues slipped 1.9 percent to $340.8 million from $347.57 million. Comparable-store sales were off 13 percent.
On top of everything, a rumor that the chain was going to file a petition for Chapter 11 reorganization swept through the industry in January. Ortega, stating that he wants to put the rumor to rest, stressed, “We are not and never contemplated filing a Chapter 11 petition.” Clothestime executives recently met with factors in Los Angeles and here to indicate what they consider to be signs of a turnaround.
While the factors said they didn’t fully agree with the recipe executives are using to cook up a turnaround, they were satisfied with the company’s cash position and lack of any long-term debt.
Ortega said, “Our banks showed their confidence in us by extending through February 1997 a financing deal that wasn’t scheduled to expire until 1996.”
He said the company has also moved to conquer its quality control problem and established a quality assurance department during January and February to check goods during their production.
Executives hope quality problems will be eased by the increased purchases of branded merchandise. Ortega said he hopes to grow national brands’ percentage of total sales to 40 percent from its current 20 percent. In addition, Clothestime officials said it now has a $350 million juniors business and would like to add $100 million in casual workwear over the next few years. — Fairchild News Service