CHIC BY HIS QUARTER LOSS GETS DEEPER
NEW YORK — Hurt by continued weak retail demand in its core denim business, Chic by HIS widened third-quarter losses to $1.9 million from a $1.4 million loss a year earlier.
Operating income leaped over 500 percent to $993,000 from $148,000, a result of Chic’s efforts to better manage operating expenses, the company said. In the quarter, selling, general and administrative expenses were trimmed to 21.1 percent of sales from 25.1 percent. But the bottom line reflected higher interest and finance costs, plus an income tax provision against a tax benefit a year ago.
Sales slipped 12.7 percent to $52.3 million from $59.9 million. U.S. sales fell 14.2 percent to $32.3 million; European sales fell 10 percent to $20 million.
Volume was hurt by the weak denim market and a change in product mix to khaki and twill products that have lower selling prices, Daniel Rubin, Chic chief executive, said in a Friday conference call with analysts and investors. The change also hurt Chic’s gross profit margin, he noted. Gross profit in the quarter fell to 22.2 percent of sales from 23.6 percent a year earlier.
Chic’s top line was boosted by about $3.2 million in sales from Stuffed Shirt, the company said. Chic acquired most of the assets of Stuffed Shirt, a jeans and separates maker, in January. Earlier this month, Chic acquired private label vendor Sierra Pacific. The acquisitions of Stuffed Shirt and Sierra Pacific are part of a strategy to diversify into private label manufacturing, Rubin said.
“My opinion, and the opinion of the board, is that this route of private label, specialty store business is where we have to put a lot of our future focus,” Rubin said.