JM Associates Buys Clothestime
Clothestime is getting another chance at big-time retail. The Anaheim, Calif.-based retailer has been acquired by JM Associates, a multinational juniors manufacturer that plans to restructure the 250-store chain’s image along with its merchandising mix over the next two years.
Both companies declined to give details of the transaction at press time. However, Clothestime expects that its revenue base will grow by a minimum of 30 percent a year and that its revenues will exceed $300 million in less than two years, said David Sejpal, chief executive officer.
This is a long-awaited deal for Clothestime, the one-time public company that emerged from bankruptcy in 1997 after falling on hard times during the 1990s when competitors grabbed market share with brand names.
The 30-year-old company earned $150 million in net revenue for 2002, a slight increase over the previous year, said Sejpal.
“We are hopeful that the synergy of new capital and merchandise will revive the retailer’s position in the marketplace,” said Bob Klausner, senior vice president and general merchandising manager.
New York-based JM Associates is a multinational manufacturer that produces junior branded apparel at its vertical facility in Mexico and then sells through global distributors. JM Associates owner Mark Stern has been named chairman and chief executive officer.
“The purchase of Clothestime by JM Associates is part of a strategic plan to revitalize the chain as Clothestime embarks on its 30th anniversary,” said Stern.
Clothestime initiated its restructuring two months ago by converting roughly 40 of its units into outlet stores and shuttering about 20 sites, including a location in Huntington Beach, Calif.
Clothestime still wants to position itself as a discount alternative to pricier juniors retailers such as Charlotte Russe and Wet Seal by offering fashion-forward apparel at prices between 30 and 40 percent lower than its competitors’ prices, said Sejpal.
The company’s merchandising mix will continue to offer directional fashion for juniors shoppers with some emphasis on crossover career apparel for an older demographic. JM Associates may introduce its own brand labels in addition to the store’s private-label and branded-merchandise mix, which includes Paris Blues, Bubble Gum, Bongo and LEI.
Klausner said Clothestime’s private-label apparel brands—Blue Threads, Spoiled Girls and Eye Candy, among others—will continue to be produced domestically and in the Far East. Additionally, JM Associates may choose to introduce other branded apparel direct to the retailer. Klausner said shoppers will see new offerings in stores as early as April 2003.
Sejpal said the company has no plans to shed workers from its base of 1,800 employees, and the company will see a rollout of approximately 100 stores on the West Coast by the end of next year. Other plans include the acquisition of more retail outlets in California, Texas, Florida and Colorado, according to Sejpal. The company also plans to open several stores in New York and New Jersey as early as fall 2003.
The challenge for Clothestime now will be to maintain a lower price scale than its competitors while continuing to be at the forefront of junior trends, said Tony Cherbak, an analyst at Deloitte & Touche in Costa Mesa, Calif.
“The value equation is very important to their customers, who will be looking for fashion-forward styles, and that’s what [Clothestime] will have to do on a consistent basis to be successful.” —Claudia Figueroa
