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Chaus Loss Expands as Sales Fall

Cost cuts help to left gross margin.

Bernard Chaus Inc. was unable to cut costs fast enough to compensate for sharply lower sales in the fourth quarter, driving up its losses.

For the three months ended June 30, the women’s sportswear marketer suffered a net loss of $3.2 million, or 9 cents a diluted share, compared with $2.6 million, or 7 cents, in the 2007 quarter. Sales slid 17.6 percent to $24.4 million from $29.7 million in the year-ago period.

However, with an 18.4 percent reduction in costs of goods sold, to $18.2 million, gross margin improved to 25.3 percent of sales from 24.5 percent in the 2007 quarter. A 5.4 percent cut in selling, general and administrative expenses, to $9.2 million, also helped keep the loss in check.

“During the fourth quarter, we saw a continuation of the trends we experienced in the third quarter, with our Chaus and Kenneth Cole department and specialty store labels achieving significant growth, which was more than offset by a decline in our club, private label and Cynthia Steffe businesses,” said Josephine Chaus, chairman and chief executive officer. “We are focused on continuing the positive momentum of the Chaus and Kenneth Cole brands, while taking the necessary steps to address the softer areas of our business.”

For the year, the New York-based company reported a net loss of $7.7 million, or 21 cents a diluted share, versus net income of $522,000, or 1 cent, in 2007. Sales receded 19.6 percent to $118 million from $146.8 million.