CHAUS FACING CHALLENGES

Byline: Anne D’Innocenzio

NEW YORK — Despite just posting its first quarterly profit since the quarter that ended in December 1993, Bernard Chaus Inc. officials aren’t ready to hype the news.
When asked by a stockbroker at the annual meeting here last week why the company wasn’t pitching itself more to Wall Street, Andrew Grossman, president and chief executive officer, replied, “We believe in the future of the company, but…we are not ready to talk about profitability.”
Grossman added, “We are just not comfortable as of yet. We want to be conservative.”
Some 20 shareholders turned out for the meeting, held Thursday at the Rihga Royal Hotel here. Grossman, who came on board in September 1994 as chief executive officer to spearhead a company turnaround, conducted the meeting along with Wayne S. Miller, chief financial officer, and Josephine Chaus, chairwoman.
As reported, Chaus, helped by initial shipments of its licensed Nautica women’s line, achieved earnings of $361,000, or 1 cent a share, in the first quarter ended Sept. 30, turning around a loss of $407,000 a year ago.
Sales eased 1.8 percent to $48 million from $48.9 million.
However, Miller stated that weaker than anticipated bookings for holiday will cause the fiscal second quarter to be no better than a year ago. He told shareholders that he is bullish about the second half of the year, which is expected to be helped by stronger initial seasonal orders coupled with tight inventory. However, company officials would not say whether the second half would be profitable.
In the year ended June 30, Chaus, which has lost money in four of the past five years, reduced its loss to $24.4 million from $27.9 million. The loss in fiscal 1995 included a $1.2 million restructuring charge and $8.3 million in unusual expenses. Sales slid 6.1 percent to $170.6 million from $181.7 million.
At the meeting, Josephine Chaus offered kudos to Grossman for getting the firm’s inventory under control and paring down expenses.
For fiscal 1996, the company reduced its SG&A expenses by $4.6 million. Now, she said, the big step is to “develop partnerships with retailers” for the brand, which has traded up from the moderate into the upper-moderate zone. The average retail price is around $50, compared with $19.99 three years ago, according to Chaus.
Without offering specifics, Grossman noted increased sell-throughs for the Chaus brand over the past 60-day period, adding that the merchandise is getting better and bigger space at department stores. Dillard Department Stores and May Department Stores Co. now house Chaus in the better area, while Macy’s East and West are spotlighting the merchandise in the newly developed upper-moderate area, he said. The brand is in 2,200 doors.
As for its Nautica line, which currently is in about 100 doors, Grossman said that he has been pleased with its performance.
“We now have a clearer direction of what the product should look like,” he said, adding that the two areas — fast high tech fashion and casual weekend wear — are really taking off. “It is kind of mirroring what is happening in men’s.”
He noted, however, that building the Nautica women’s business is going to take some time, in contrast with the skyrocketing performances of two other big-name lines launched this fall, Tommy by Tommy Hilfiger and Lauren by Ralph Lauren.
Grossman said that he is looking into other growth opportunities, including other licensing deals, and the possibility of developing other categories under the Chaus labels. For example, he is considering relaunching the dress division, which was closed during the last fiscal year.
“I am looking into a lot of different things,” he said.

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