LOS ANGELES — Like relationships, apparel brands can get a seven-year itch.

Dress label Tessuto, which saw revenues deflate after three strong growth years in the late Nineties, is trying to scratch its anniversary itch with a new designer and a new social-occasion dress line.

Although pouring money into a soft category during a recession sounds risky, Tessuto co-founders Stephen Soller and Gary Bub emphasized that it’s important in a tough economy to stick to a defined market niche.

“This is what we’re focused on and what we can do well,” said Soller, adding that the social-occasion launch is an efficient extension of resources. “If you can do day dresses, you can do cocktail and you can do evening.”

Further, added Bub: “You cannot chase others’ business.” It’s a lesson they’ve learned the hard way. At its height in 1998, the company generated $27 million in sales and hung upstairs in Fred Segal Melrose, next to labels such as Ann Demeulemeester and Marni.

But as the company began taking on private label business and broadening distribution, they “started to dilute the line in the point-of-view of the little boutiques,” Soller said.

Revenues dropped to $15 million in 2001, partially from the economic slowdown. But Bub and Soller feel confident that they’re positioned for double-digit growth in 2002. In recent months, the brand’s profile has begun to inch back up with editorial placements in In Style, Elle and Vogue.

Bub projects the brand will grow to $20 million in 2002, based on strength in the day dresses and children’s wear. Soller and Bub credit Hope Gregory, formerly in design at Laundry by Shelli Segal, for giving the business new flourish.

In her six-month tenure, Gregory has worked on diversifying silhouettes and fabrics away from the company’s signature bias-cut rayon slip looks. She’s also paying attention to novelty details, such as grosgain ribbon belts and Mexican embroideries.

“Minimal isn’t there anymore,” she said. “Each dress has to be very special. It has to sing on the hanger.”

Carrie O’Brien, who has carried Tessuto for three years in her Musette boutique in Santa Monica, Calif., said she upped her order for spring by 20 percent based on a stronger presentation.

“It was a little fresher and a little younger,” she said, “more contemporary.”

Gregory also is doing more romantic blouses that pair with jeans, to acknowledge denim’s importance in the market.

What hasn’t changed is Soller’s emphasis on sourcing and developing prints, which are Tessuto’s hallmarks. “The fabrics tell the story,” said Soller, noting that tessuto in Italian means fabric.

He works with 50 European mills, rummaging through archives, negotiating for exclusivity. “You have to have a good relationship for them to give you their favorite, most special thing,” he said.

Prints carry over to the new eveningwear line, a rarity in a category dominated by solid taffetas and matte jerseys sprinkled with bits of beading. Wholesale prices range from $99 to $169.

Spring standouts include a fuchsia and black feather print on a column dress and a chiffon halter with an oversize stargazer print. For a fall interpretation, Soller said they’ll use dark tonal prints that give a textured look.

“Right now, dresses are a tough category,” said Soller. “Everyone is looking for markdown money, no matter what your turn rate.”

But, he adds, all things go in cycles, and he’s ready for when the consumer wants something other than jeans.