Recession Turns the Tables on 2 Clothing Retailers : Sales: Clothestime reported improved quarterly earnings. Wet Seal slipped.

Reflecting how two clothing retailers’ different strategies have fared during a recession, Clothestime Inc. on Thursday reported higher earnings for its latest quarter while Wet Seal Inc.’s earnings dropped in the latest three months.

Clothestime Inc., a women’s clothing chain that has been emphasizing a strategy of offering name-brand apparel at discount prices, said its first-quarter earnings rose to $522,000, contrasted with a $1.4-million loss in the corresponding period of 1990.

Wet Seal, which sells moderately priced apparel to young women, said its earnings fell to $673,000, down 40% from $1.1 million last year.

Wet Seal leases stores in major shopping malls in Florida, California and elsewhere in the West. Clothestime sells lower-priced items primarily in small shopping centers and other locations where rents tend to be lower than malls. Analysts said Clothestime’s off-price strategy appears to be working in a slumping economy.

Clothestime, a 385-store chain based in Anaheim, said its revenue climbed 21.4% to $56.8 million for the quarter ended April 27, up from $46.8 million last year. Comparable store sales rose 7% for the quarter.

David Sejpal, chief financial officer, said the results were slightly better than the company had forecast. Clothestime stuck to its strategy of buying close-out merchandise from well-known manufacturers to hold down its retail prices.

Gregg Sloate, a retail analyst for Seidler Amdec Securities Inc. in Los Angeles, said Clothestime “was able to react to and capitalize on the consumers’ desire for value-oriented merchandise.” He said the chain was able to effectively buy low-priced clothes and sell more of its inventory.

Clothestime stock closed at $4.875, up 62.5 cents per share.

Wet Seal, a 97-store chain based in Irvine, said its revenue rose 14.6% to $23.8 million for the quarter ended May 4, up from $20.8 million a year earlier.

The company attributed the higher revenue primarily to 19 new stores that opened during the quarter. Comparable-store revenue--a more accurate indicator of how a retailer is faring compared to last year--declined 13.9%.

Wet Seal shares closed at $15.50, up $2.125 per share.

“While the overall quarter was disappointing, our earnings per share were in line with most security analysts’ expectations. Like many other retailers, we are eager for a turnaround in the economy and a return in consumer confidence,” Wet Seal President Ken Chilvers said in a statement.

The company has been expanding quickly and plans to open 20 new stores and renovate four others this year. Chief Financial Officer Alan Weinstein said the expansion should position the company for an earnings rebound when the economy improves.

Analyst Sloate said that although Wet Seal’s comparable store sales were weak, the company has effectively cut its costs.

Miriam W. Meglan, an analyst for Johnson Rice & Co. in New Orleans, said Wet Seal is known for its excellent management. But she said the retailer lacks the geographical diversification that would help insulate it from regional economic downturns.

RESULTS FROM THE RAG TRADE

Two of the best known retail chains based in Orange County, Clothestime and Wet Seal, showed decidedly different results in their first fiscal quarters.

Dollars in thousands, except per-share data

WET SEAL

Percent 1991 1990 Change Total revenue $23,825 $20,788 14.6 Net earnings $673 $1,120 -39.9 Earnings per share $.06 $.12 -50

CLOTHESTIME

Percent 1991 1990 Change Total revenue $56,787 $46,829 20.2 Net earnings $522 $-1,364 NA Earnings per share $.04 -$.10 NA

Source: Clothestime Inc. and Wet Seal Inc.