Clothestime Racks Up Strong Quarter, to Add 50 Outlets

Clothestime Inc., an operator of off-price women’s apparel stores, reported third-quarter earnings of $1.4 million and a healthy gain in sales.

The company also said it plans to open at least 50 new stores next year.

The Anaheim-based company, which already has 402 stores, has prospered during the recession with a discount pricing strategy and tight control over inventories. Most Clothestime stores are in lower-priced strip malls and shopping centers that cater to bargain shoppers.

Clothestime reported sales of $62.1 million for the quarter ended Oct. 26, up 28% from $48.6 million a year earlier. Last year the company lost $83,000 during the same quarter.

David Sejpal, the company’s vice president, said Clothestime is sticking by its formula for success: “Basic merchandise, brand names and good values.”

Sejpal said that the company has a strong balance sheet, with $25 million in cash and that Clothestime expects to finance its expansion without dipping into its cash reserves.

For the nine-month period, sales rose 23%, to $188 million from $152.4 million a year earlier. Net income was $4.1 million, or 28 cents a share; it was $17,000, or zero cents a share, a year ago.

The company said same-store sales rose 13% in the first nine months of this year.

Sejpal said the company is planning to advertise in varied media, including MTV and other cable TV stations. But it does not plan major ad efforts unless competition demands it.

“Should the department stores get promotional, we’re going to match them,” Sejpal said. “We’re not going to give up market share.”

Bill Rankin, an analyst for Pacific Growth Equities in San Francisco, said Clothestime’s results are impressive in a sluggish economy.

Even if the economy picks up, “the pressures on consumers will not go away quickly,” he said, so Clothestime should continue to do well.