Zachary Inc revenues have increased by 50 % in past 2 years whereas most other brands have had depressed sales during the same period .
ZAC , which is the parent of Zachary Inc . , has reported a slight decline in overall sales in past 2 years
Paradox – the other subsidiaries of ZAC did not do as well .

A)The sales of clothing at Zachary, Inc.'s boutique stores, which, unlike department stores, are owned and operated by the company itself, have held steady over the last two years. Does not explain
B) Two years ago, Zachary, Inc. began an ambitious new advertising campaign; in each of the last two years, the company's advertising department has overspent its planned budget by almost half. Advertising campaign might decrease profits but won't impact the revenues
C) Z.A.C. is renowned for the quality of its fabrics, and sells large quantities of fabric to a variety of manufacturers of men's clothing. Correct - Z.A.C is a supplier of fabrics to other clothing brands . We know that most of the clothing brands have had depressed sales during last 2 years . Because of slowdown in demand , these brands purchased lesser amount fabric from ZAC . Hence , the total revenue of ZAC declined .
D) Zachary, Inc. formerly manufactured leather accessories and women's clothing in addition to men's clothing, but, for the past three years, the company has produced only men's clothing. Does not explain the paradox as we already know that Zachary Inc sales have increased YoY for last 2 years . This might make more sense if it talked about the parent company .
E) In the last two years, the percentage of Zachary, Inc.'s clothing sold by department stores at discounted prices has been unusually high, a result that analysts have blamed on the sluggish economy. Incorrect - Does not address the paradox as we are only concerned about total sales/revenues.
Answer C

Can you explain in detail? Didn't understand your solution

Thanks in advance.

Ok

The stem says that the departments that sell clothes had an increase of 50% , specifically those from Company Z

Instead other brands in the same departments had a decrease in sales

However, OVERALL company Z had a decrease in sales IN THE departments where common people go to buy clothes (families, guys, girls, so forth)

WHY we do have such discrepancy ?? it is weird apparently

(A) The sales of clothing at Zachary, Inc.'s boutique stores, which, unlike department stores, are owned and operated by the company itself, have held steady over the last two years.

this answer tells us about the clothes sold in those stores owned by Company Z itself. Do not tell us anything about the decrease or the paradox

(B) Two years ago, Zachary, Inc. began an ambitious new advertising campaign; in each of the last two years, the company's advertising department has overspent its planned budget by almost half.

What happened two years ago and the ad campaign is irrelevant to our explanation

(C) Zachary, Inc. is renowned for the quality of its fabrics, and sells large quantities of fabric to other manufacturers of men's clothing.

This si good. Comany Z sell to Company X which creates clothes thanks to the fabric of Company Z. So they sell more clothes and therefore Company Z had an increase

(D) Zachary, Inc. formerly manufactured leather accessories and women's clothing in addition to men's clothing, but, for the past three years, the company has produced only men's clothing.

leather and women clothes tell us nothing

(E) In the last two years, the percentage of Zachary, Inc.'s clothing sold by department stores at discounted prices has been unusually high, a result that analysts have blamed on the sluggish economy.

The selling off, discounted, tell us nothing

Hope now is more clear

To summarize the 'surprising result' which is specifically stated in the passage: Zach has increased sales to department stores when others have not. It is easy to be confused by the rest of the passage, as it gives a lot of detail, but not necessarily regarding the surprising result.

"For each of the past two years, major department stores have reported a nearly 50% increase in their sales of men's clothing manufactured by Zachary, Inc., a result that is all the more surprising because the sales of most other brands of men's clothing have been depressed over the same period.")

What might explain this?

A) nothing about ownership in passage
B) nothing about advertising in passage
C) Ah, now it does mention sales in the passage, and it could be that the sales were to another clothing manufacturer, not the department store...keep
D) nothing about mens vs womens or leather or non-leather in the passage or 3 year timeframe
E) no mention of the economy in the passage

Answer must be C by process of elimination.

(A) The sales of clothing at Zachary, Inc.'s boutique stores, which, unlike department stores, are owned and operated by the company itself, have held steady over the last two years. - Out of scope as it does not matter whether boutique stores are selling more or less.

(B) Two years ago, Zachary, Inc. began an ambitious new advertising campaign; in each of the last two years, the company's advertising department has overspent its planned budget by almost half. - If they underspent then would it increase the sales? Ads ~ sales. Nope. Out of scope

(C) Zachary, Inc. is renowned for the quality of its fabrics, and sells large quantities of fabric to other manufacturers of men's clothing. - Meaning that most of the sales is with other manufacturing companies. Argument already states that other companies also went down. So Conclusively, Z's sales went down.

(D) Zachary, Inc. formerly manufactured leather accessories and women's clothing in addition to men's clothing, but, for the past three years, the company has produced only men's clothing. Out of scope. Again it does not matter

(E) In the last two years, the percentage of Zachary, Inc.'s clothing sold by department stores at discounted prices has been unusually high, a result that analysts have blamed on the sluggish economy. - opposite

Hence C.