Translation:Do you have clothes?
I always have trouble with sentences which imply the "you" - esp. when we don't have the context around this sentence. "Are there clothes?" should be acceptable too.
I agree with you. 있다 does not mean "to have", it conveys the idea of "to have", but it means "to be". In a context whers you talk about a store and someone asks "옷이 있어요?" it would definitely be translated as "Are there clothes?"