CHAUS QUARTER DOWN $3.7M
Byline: Jennifer Weitzman
NEW YORK — Faced with a highly promotional department store climate, Bernard Chaus last week reported a multimillion-dollar loss for the second quarter.
Still the New York-based better sportswear maker said it expects to see substantial improvement in its financial performance in the second half.
For the three months ended Dec. 31, the company reported a loss of $3.7 million, or 14 cents a share, versus income of $631,000, or 2 cents, in the year ago period. Sales dipped 30.5 percent to $30.2 million from $43.5 million. Higher markdowns depressed gross margins to 16.6 percent of sales from 20.9 percent.
“Our performance in the first half of fiscal 2001 reflects the difficult apparel and retail marketplace and continued pressure on our gross margins, stemming from the highly promotional conditions prevailing in the industry,” Josephine Chaus, chairwoman and chief executive of the company, said in a statement.
The company said it is working on a number of initiatives to help it compete in the current difficult environment for apparel retailing and to help Chaus become profitable again.
According to Nicholas DiPaolo, vice chairman and chief operating officer, these efforts include “working in close coordination with our department store customers to best manage our business in their stores and to explore opportunities to expand the distribution of our lines as we look ahead.” In addition, he said the company is focusing on identifying areas in which it can reduce expenses.
DiPaolo said he expects these actions to “lay the groundwork for Chaus’s long-term growth.”
A company spokesperson confirmed a report published in these columns in late December that Ivy Karkut’s tenure as president ended in the same month, just one year after it began. She said the the parting was “amicable” but declined to comment on details of the departure, such as severance.
Karkut received a $250,000 signing bonus in addition to a base salary of $900,000 for her first year of service and $1 million for the following two. In addition to a bonus of 2.5 percent of net income in the event that preestablished goals were met, she should have received options to acquire 675,000 shares at an exercise price of $2.50 each, vesting over four years, and 100,000 shares of restricted stock.
Karkut last year became the latest in a long line of highly regarded executive talent that has been unable to fit in at Chaus, of which Josephine Chaus is co-founder and majority shareholder. A Form 10-K filed with the Securities and Exchange Commission last October revealed that Chaus paid $848,347 to former chief executive officer Andrew Grossman in June, as part of a settlement over breach-of-contract arbitration.
Also in October, the firm said that, because its stock price on the New York Stock Exchange had dropped below the $1 level, it would be listed on the over-the-counter bulletin board system. Its stock has traded at or below 50 cents a share since then with a 52-week high of 75 cents.