NEW YORK — Boosted by a higher gross profit margin, Bernard Chaus Inc. provided evidence of a turnaround with second-quarter gains that came against year-ago losses.
The women’s sportswear manufacturer said income for the three months ended Dec. 31 was $580,000, or 2 cents a diluted share, against a loss of $5.3 million, or 20 cents, in the year-ago period. Sales rose 3.1 percent to $30.9 million from $30 million. Revenues include a one-month contribution from S.L. Danielle, a manufacturer of moderately priced, private label apparel acquired in December.
Josephine Chaus, chairwoman and chief executive officer, said in a statement: "The turnaround we reported this quarter builds on the progress we have made over the past year, and reflects a significantly higher gross profit margin of 26.6 percent versus 10 percent for the comparable quarter a year ago."
The firm’s focus on efficient product sourcing and strict cost controls contributed to a "$1.3 million reduction in selling, general and administrative expense [for its first six months]," Chaus said.
The Chaus brand is sold in department stores, while S.L. Danielle is primarily a resource for specialty chains including Charming Shoppes and Chico’s FAS.
Nick DiPaolo, vice chairman and chief operating officer, said of the company’s results, "In this atmosphere, we’re really pleased. I don’t think we hear of many success stories in this environment."
DiPaolo noted that department stores appear to be hardest hit by the tough economic climate and that, based on conversations he has had with them, most don’t foresee any change in the year ahead. "We’re not getting any real sense of optimism from the retailers," he said. "We plan on operating in this climate — not a very good one — for the balance of our fiscal year."
The company is working to effect synergies between its two divisions, with S.L. Danielle gaining fashion input from Chaus’ design team and the core branded operation benefiting from new sourcing avenues. Chaus sources from the Far East, while S.L. Danielle’s contacts include the Far East and countries where the "turn is much faster," such as Mexico.DiPaolo disclosed that the company is exploring the introduction of a new label under the Chaus umbrella, which would utilize S.L. Danielle’s low-cost sourcing expertise. The firm is also in discussions with other retailers regarding new private label accounts for S.L. Danielle.
"We are very optimistic about the contribution made by S.L. Danielle. It will be a significant contributor," he said.
In the six-month period, income was $2.1 million, or 7 cents, versus a loss of $5.9 million, or 22 cents, last year. Sales declined 5.6 percent to $65.7 million from $69.4 million.
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