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2 Retailers Fail to Reap Fall Fashion Gains : Apparel: Clothestime and Wet Seal stocks sag. Lack of a strong fad, stiff competition are blamed.

October 07, 1994|GREG JOHNSON | TIMES STAFF WRITER

September usually means a boost for clothing retailers as parents buy children's back-to-school outfits, adults update their fall wardrobes and consumers start making early purchases for the upcoming holiday season.

But that usual seasonal gain never materialized this year for two Orange County companies that sell junior women's wear aimed at teen-agers through "40-somethings."

Clothestime Inc., the Anaheim-based off-price retailer, reported Thursday that its sales fell by 6% to $27.6 million for the five weeks ended Oct. 1, down from $29.5 million for the same period last year. Sales at stores open more than a year--an important retail gauge--fell by 19%.

Wet Seal, which promotes its clothing as fashionable but still affordable, hasn't released sales figures for the third quarter. For the second quarter, the Irvine-based chain posted a loss of $1.2 million on revenue that fell 13% to $31.1 million. Its stock price has stalled since then, languishing at about $3.25 a share.

Neither company would comment Thursday. Retail industry analysts, however, said that both retailers, like other specialty chains catering to younger women, are being hurt by the absence of any exciting fashion development, the last big wave having been the grunge look. Nothing is trendy enough right now, analysts say, to draw customers into stores.

For many junior shoppers, fashion today means "jeans and beige jackets," said Don Murray, an Orange County-based partner with the national accounting firm Deloitte & Touche. "Once you buy a pair of jeans and a jacket, how many do you need?"

Stalled sales aren't necessarily an indication of a slow economy, Murray said. Younger men are spending relatively freely, he said, for surf wear and other casual attire.

Edward Johnson, an analyst with the brokerage Johnson Redbook Service in New York, said that Clothestime, Wet Seal and other specialty clothing sellers are also being hurt by increased competition from major retailers, such as JC Penney.

"An executive at one (discount) chain told me today that it's a 'perceived perception' that you can get better deals at the big chains," Johnson said Thursday. "If you go price it out, it isn't necessarily true. But shoppers believe it, and that's hurting the (discount) chains."

But economics also is playing a role, said Kurt Barnard, editor of Barnard's Retail Marketing Report, a New Jersey publication that tracks retail sales. "Kids today just can't find good, well-paying jobs," Barnard said. "So today they're happy if they can (afford to) buy a pair of jeans."

A Snag in Clothing Clothestime and Wet Seal have seen their stock prices drop amid declining sales at young women's clothing shops nationwide. Since October, 1993, Clothestime's stock has lost nearly half its value, while Wet Seal's has declined about a third. Monthly closing prices:

Clothestime:

Thursday's close: $4.13

Wet Seal:

Thursday's close: $3.25 Source: Dow Jones; Researched by JANICE L. JONES/Los Angeles Times

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