NEW YORK — Bernard Chaus Inc. has acquired S.L. Danielle, marketers of private label and branded women’s apparel, from Robert Flug, chief executive. Terms of the transaction weren’t disclosed.

Nicholas DiPaolo, vice chairman and chief operating officer of Chaus, said that Danielle offered Chaus numerous diversification opportunities in addition to an initial presence in the moderate market. "Their price points are more than 30 percent below ours, and they are overwhelmingly private label in orientation," he said. "The combination of their strong distribution and sourcing and our design resources and scope should be very beneficial to both."

Danielle’s private label customers include J.C. Penney Co., Charming Shoppes and Chico’s FAS. The New York-based firm also produces and markets the Sew Be It brand.

DiPaolo indicated that, while Danielle has downsized in preparation for its acquisition, all design, selling, production and clerical personnel, including Flug, will remain with the firm, which owns no office, production or distribution facilities. It will be operated as a subsidiary of Chaus with Flug continuing as ceo, reporting to DiPaolo.

The purchase was made through Chaus’ existing credit facilities. In a statement, Josephine Chaus, chairwoman and chief executive of Chaus, pointed out, "The acquisition brings new capabilities and experience that will enable us to broaden our business base and reach new customers in the moderate channel. At the same time, S.L. Danielle will benefit from the resources and scale associated with being part of a larger company."

Chaus produces and markets better career and casual sportswear under labels including Josephine Chaus Collection, Josephine Chaus Studio and Josephine Chaus Sport. In the first quarter ended Sept. 30, it reported net income of $1.6 million, or 5 cents a diluted share, reversing a loss of $582,000, or 2 cents, in the prior-year quarter. This came despite an 11.8 percent decrease in quarterly sales, to $34.8 million from $39.5 million, as inventories were kept lean, unprofitable off-price sales were reduced and sourcing was upgraded. As a result, gross margin rose to 27.2 percent of sales from a year-ago mark of 20.9 percent.

However, compared with prior-year levels, total liabilities were reduced 35.3 percent to $33 million and inventories dropped 39.7 percent to $11 million.In October, when first-quarter results were released, DiPaolo said he expected revenues for the first half of the year to be "lower but more profitable."

DiPaolo noted: "Over the past year, we have made good progress in increasing Chaus’ profitability by enhancing efficiencies and lowering costs. This acquisition will provide opportunities to grow our top line through expansion into an attractive new area. We expect the transaction to be accretive to earnings in fiscal 2003."

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