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Even while giving short shrift to high-end clothes, Reitmans (Canada) Ltd. racked up third-quarter sales of $258.6 million, an increase of 8.4 per cent from the same period a year ago.

The Montreal-based company is aiming for the pocketbooks of middle-class Canadian women as it competes with other specialty stores for growth in a changing retail landscape.

"We've left the haute couture and the really high-priced stuff to the others like Holt Renfrew and the specialty boutiques ," said CEO Jeremy Reitman.

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"We've always built our business on the middle and the lower middle because that's where the money is, that's where the people are and that's where the broad base of customers are."

In addition to the Reitmans banner, the company operates Smart Set, RW & Co. (which also sells some men's fashions), Thyme (maternity clothes), Cassis (new banner for mature boomers) and plus-sized Penningtons and Addition-Elle with a total of almost 900 stores across Canada. The company doesn't operate in the United States.

About 40 new stores could open in 2007, while as many as nine unprofitable locations could close, Mr. Reitman said, without specifying which would open or close. Fifty-five new stores opened this year.

Mr. Reitman also said he was instrumental in bringing up-to-moment fashion store Zara from Spain to Canada and had a five-year relationship with the chain before that.

The family-run Reitmans, which celebrated its 80 anniversary this year after being founded by Mr. Reitman's grandparents, bills itself as Canada's largest specialty retailer.

But despite his family's retail heritage, Mr. Reitman says, "I'm not a major shopper myself," adding he "doesn't want to freeze walking from store-to-store in a plaza."

The Reitmans philosophy of clothes designed for real life, not the runway, is reflected in its humorous TV commercials, which show women mocking glamorous poses and living regular lives in Reitmans clothes.

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Mr. Reitman says the TV ads, now in their second year, for the Reitmans division have boosted sales.

"They like the fashions, the value is extraordinary," he said in an interview at the company's headquarters. "Canadians by nature are fairly thrifty and it's our heritage, our several heritages (to be thrifty)."

He said he's also considering future acquisitions but "we're not quite there yet."

"There may be very well five different businesses that we can perhaps acquire in the relatively near future within the next five years," Mr. Reitman said.

He notes how the Canadian retail landscape has changed.

"The major shift that we have experienced over the years is the decline of the department store. And as a result of the decline of the department store. the specialty chain - such as ours and La Senza, to name two - have grown their market share and grown their businesses," he said.

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La Senza Corp., a Montreal-based lingerie seller, recently struck a deal to be bought for $710-million by the U.S. owner of the Victoria's Secret chain, Limited Brands, based in Columbus, Ohio.

Retail analyst John Winter said Reitmans hasn't overestimated the affluence of its market.

"They have a nice niche and they exploit it," said Mr. Winter, of Toronto-based John Winter Associates.

Staying out of the United States is an "excellent move" with all of the challenges in the U.S., Mr. Winter added.

Mr. Reitman doesn't believe that fashion by U.S. retail giant Wal-Mart will affect his sales.

"Psychologically, I think most women, most consumers, like Wal-Mart for the offerings it has but it's not a fashion store by the wildest imagination."

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Mr. Reitman said his company has about 250 stores in Wal-Mart anchored shopping centres in Canada and finds that Wal-Mart brings in shoppers, which helps other retailers on the site. "We've been very successful with Wal-Mart."

Despite the changing landscape, Reitmans recently reported a rise in third-quarter profits, to $23.4 million from a year-earlier $19.2 million, on strong sales growth and raised its quarterly dividend by 14.3 per cent.

Reitmans started its Smart Set banner in 1970, catering to 20- to 30-year-olds, and RW & Co. in 1999, for younger women with a target age of 24.

And last August, the company launched the Cassis banner, which aims at the baby boomer.

It acquired Penningtons, for plus-sized women, in 1995 and Dalmys (Canada) Ltd. in 1996. In 2002, Reitmans bought Shirmax Fashions Ltd., which includes plus-sized Addition-Elle and Thyme maternity stores.

Shares in Reitmans were trading at $21.98, down 15 cents, Wednesday afternoon on the Toronto Stock Exchange.

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