S. Thomas Saltz, the octagenarian haberdasher who has draped traditionally tailored Washingtonians in tweeds and worsteds for half a century, announced yesterday that he is selling the Georgetown University Shops.

A corporation headed by John B. Smoot Jr., a former Woodward & Lothrop clothing merchant, has agreed to pay more than $1 million for the two stores, trade sources reported.

After the sale is completed on Friday, Saltz said he plans to retire -- this time for good.

"I've been at it 73 years. I'll just have to get used to not being here every day," said Saltz.

The last time Saltz retired was in 1955, when he and his brother sold the Lewis & Thos. Saltz stores. Nine years later -- at the age of 69 -- Saltz returned to the clothing business by purchasing the Georgetown University Shop.

The little store on 36th Street NW was doing $450,000 a year then, Saltz recalled yesterday. This year the original shop and a Friendship Heights branch opened last year on Wisconsin Avenue will sell $4.5 million worth of clothing, he added.

Saltz said he decided to retire now and pursue his interest in antiques and impressionist paintings because "I received a very attractive offer from some fine people."

The buyer of the shops, John B. Smoot, worked in the menswear division of Woodward & Lothrop for 19 years and since 1969 has been executive vice president of T.A. Chapman Co., a Milwaukee chain of high-quality specialty stores.

The son of an itinerent peddler who opened a general store in Crisfield, Md., Saltz has been in the clothing business in Washington since 1925 when he went to work for what was then Raleigh Haberdashers.

In 1929, Tom Saltz, his brother Lewis and a third partner opened the first Saltz Brothers store downtown. Seven years later, after a dispute with the partner, the brothers opened their own stores as Lewis & Thos. Saltz. For years they competed directly with Saltz Brothers and their former partner.

The brothers sold the Lewis & Thos. Saltz stores in 1955 after Lewis became ill. The Lewis & Thos. Saltz stores are now owned by a group headed by Washington real estate investors Stanley Rosensweig, Sonny Abramson and Theodore Lerner, who purchased them from the Richard Steen family for $3 million in 1977.

Thomas Saltz created the mellow old wood and stained glass look that's as much a Saltz stores tradition as the conservatively cut clothing. He wrote a column on "creative retailing" for Daily News Record, the men's clothing counterpart of Women's Wear Daily, for several years before buying the Georgetown University Shop in 1964.