Clothestime Prospers While Wet Seal Slips

The spring fashion quarter was a study in contrasts for two Orange County women’s fashion retailers, Clothestime and Wet Seal, according to results reported Thursday.

Clothestime Inc., based in Anaheim, said profit rose 25% to $1.3 million, or 9 cents a share, for its first fiscal quarter, which ended May 1. That compared to earnings of $1 million, or 7 cents a share, for the same period a year earlier. Sales also rose, growing by 15% to $78.4 million from $68.3 million.

In contrast, Wet Seal Inc. in Irvine reported a sharp decline in profit for its first fiscal quarter. Earnings fell to $71,000, or 1 cent a share, from $854,000, or 7 cents a share, for the same period a year earlier. Sales were down 2.3% to $33.1 million from $33.9 million.

“Discount strategies like Clothestime’s do well in a recession, while a company like Wet Seal has attractive clothing (but) at higher prices,” said William Rankin, an analyst at Pacific Growth Equities, an institutional research firm in San Francisco. “Clothestime also has fewer of its stores in California, while the majority of Wet Seal’s stores are in the state.”

California continues to lag the rest of the nation in recovering from the recession.

Kathy Bronstein, president of Wet Seal, linked the company’s lackluster sales to the weak economy, which has held down consumer demand; uncertainty about President Clinton’s economic recovery plan, and smaller-than-expected tax refunds because of under-withholding.

At Clothestime, however, President Norm Abramson said that the company is benefiting from consumer caution. The company reported that its sales for stores open more than a year were up 2% for the quarter, though for April the company reported that, for the first time in 30 months, its same-store sales were down, falling 3%.

Clothestime has 487 stores, including 245 in California. It is opening 15 to 20 stores in the New York area as part of a move to become less dependent on the weak California economy and to expand into unsaturated territory.

By year’s end, Abramson said, the company expects to have about 530 stores.

At Wet Seal, same-store sales for the quarter were down 14%.

“We’re in malls and are a full-priced retailer,” said Alan Weinstein, chief financial officer. “Naturally, worried consumers can shop at the Clothestimes of the world if they don’t mind being a little behind the fashion.”

Weinstein said Wet Seal expects customers to return once the recession eases. But he said that Wet Seal has hired a market research firm to help refine its strategy.

Wet Seal has 128 stores, about 80 of which are in California.