NEW YORK — Bernard Chaus Inc. posted first-quarter profits that fell from year-ago levels because of higher operating costs and a bigger tax liability stemming from its S.L. Danielle acquisition last year.

This story first appeared in the November 4, 2003 issue of WWD. Subscribe Today.

For the three months ended Sept. 30, income fell 35.4 percent to $1 million, or 3 cents a diluted share, from $1.6 million, or 5 cents, a year ago. Sales rose 11.5 percent to $38.8 million from $34.8 million.

Nick DiPaolo, vice chairman and chief operating officer, said that this year’s reduction in profits reflects the higher operating costs included from the absorption of the S.L. Danielle acquisition, as well as a New Jersey tax code provision that “doesn’t recognize net operating losses from prior years in calculating taxes.”

Josephine Chaus, chairman and chief executive officer, said in a statement that the revenue boost “reflects strong sales in our exclusive and private label business, which is allowing us to diversify our revenue base by entering the moderate and mass market segments of the women’s clothing market.”

DiPaolo noted that, while the firm is working to further build the private label business through S.L. Danielle, “we are going to continue to invest in ways to make the Josephine Chaus brand more important in the department store distribution channel.”

Chaus is refining its product development and working with outside agencies on various branding initiatives, including an advertising program. DiPaolo said that the advertising campaign, first in magazines and newspapers, will occur during the current fiscal year.

DiPaolo said that the firm was “disappointed” with the Josephine Chaus business in department stores, noting that the channel “continues to be difficult. We saw trends in September that were much better, but then for part of October, it fell back into some weakness. We’re hopeful that the holiday season will be a good one.”

The vice chairman also noted that department stores are increasing their private label orders. That, he said, bodes well for the S.L. Danielle business.

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