Bernard Chaus Inc. reversed a year-ago loss in the third quarter on higher margins, but revenues continued to fall.
This story first appeared in the May 13, 2010 issue of WWD. Subscribe Today.
In the three months ended March 31, the New York-based firm generated net income of $16,000, or zero cents a diluted share, versus a loss of $126,000, also zero cents, in the 2008 period.
Revenues declined 16.1 percent to $27.8 million from $33.1 million in the prior-year quarter. Gross margin moved up to 29 percent of sales from 28.3 percent.
The firm explained in a regulatory filing with the Securities and Exchange Commission that declines of $6.9 million and $1.5 million in the Chaus and private label product lines, respectively, were partially offset by increases of $2 million in licensed products, including Kenneth Cole brands, and $1.1 million in the Cynthia Steffe collections.
“Substantially all of the decrease in revenues in our Chaus product lines was a result of a decrease in revenues in the discount and club channel primarily as a result of our decision to reduce levels of inventory with off-price retailers,” the firm said in its Form 10-Q.
Unit sales in the quarter fell about 24.5 percent, Chaus reported, while price per unit grew 11.1 percent during the quarter.
For the nine months, Chaus’ net loss declined to $3.4 million, or 9 cents a diluted share, from a loss of $3.6 million, or 10 cents. Revenues tightened 22 percent to $72.6 million from $93.1 million.
The firm also disclosed it had entered into a new factoring and financing agreement with CIT Group Inc. after defaulting on one of the covenants of its previous arrangement. The new plan calls for funds to be advanced to Chaus at the sole discretion of CIT and expires at the end of September 2011. The margin interest rate is 3 percent, but will revert to the earlier rate of 2 percent if the company has two consecutive profitable quarters.