ANAHEIM — Helped by strong Christmas sales, Clothestime Inc. on Wednesday reported that its revenue grew 12% last year although its earnings were down sharply.
The 381-store women's clothing chain said sales for its fiscal year ended Jan. 26 increased to $209 million, up from $187 million the previous year. But earnings dropped to $78,000, down from $461,000.
But the company reported a strong fourth quarter, with sales of $56.6 million, up a strong 26.6% from $45 million a year earlier. Most of the company's profits for the year came in the last quarter, when the retailer posted earnings of $61,000, contrasted with a $4.2-million loss in the year-earlier quarter.
The strong year-end sales followed a change in management and a change in marketing strategy that placed more emphasis on brand-name discount merchandise.
In September, company founder and Chief Executive Officer Michael DeAngelo retired at age 41 and was replaced by John Ortega, who moved up from vice chairman. Chief Financial Officer John Shanklin quit and was replaced by David Sejpal.
About the same time, Clothestime adopted a plan to buy large lots of first-quality, close-out merchandise that could be sold at discount retail prices. When the economy began to sour in the wake of Iraq's invasion of Kuwait last August, the company started putting tighter controls over its inventory in expectation that Christmas would be a slow selling season.
Sejpal said the company plans to stick to its recession program even as the economy improves. "Personally, I don't think consumer confidence is back to normal," he said. "I think customers will continue to look for a good deal."
The company has said that discounting has been one of the keys to its recent success as customers are increasingly conscious of prices and value.
Thomas H. Tashjian, a retail analyst for Seidler Amdec Securities in Los Angeles, said Clothestime's results "came through better than we expected." He credited the company's discounted name-brand format as being the major factor in the upswing in sales.