<How's CHS, IFLY?
IFLY, we got out of a while back as you may or may not recall as you keep asking about it. CHS, we've been in for months and will continue to hold until the situation changes.
Check out our reports in the archives of:
smallcapforum.com
Our write-up was good enough for CBS Marketwatch:
cbs.marketwatch.com.
..and then Crain's New York Business wanted our point of view as well. From this week's edition (sorry, I don't have the last sentence of the article):
www.crainsny.com
NO MORE DUDS: Fashion savvy and a new top team may help Josephine Chaus double sales and woo Wall Street.
Good Chaus-keeping sets new career path
Clothier puts her name on the line
by Catherine Curan
After years of quietly trying to turn around Bernard Chaus Inc., Josephine Chaus is ready to raise her profile.
She's putting her name on the company's womenswear this fall and planning a first-ever national ad campaign next spring as part of a push to gain a larger share of the $23 billion women's careerwear market.
"We're building an identity for the brand, and we want to let consumers know there is a woman behind it," says the 47-year-old chairwoman and chief executive.
With an ambitious goal to double sales to $400 million in the next few years, Mrs. Chaus is out to prove that she has developed both the fashion savvy and the managerial know-how to successfully go head-to-head with behemoths like Liz Claiborne and Jones Apparel Group Inc.
Mrs. Chaus has struggled over the past decade to sustain the company that she and husband Bernard founded in 1975 and that she's run since his death in 1991. Last year, Chaus finally hit the fashion mark and turned its first annual profit since 1992. For the year ended June 30, 1998, Chaus earned $4.3 million, or 28 cents a share, against a loss of $16.5 million the year before. Sales rose 19.6% to $192 million.
The company also appears to have weathered the failure of its licensing deal with Nautica and the abrupt dismissal of its hotshot chief executive Andrew Grossman last December.
"The hard times are behind us, and we're ready to grow," says Mrs. Chaus, who is getting ready to move the company into a new 30,000-square-foot showroom at 530 Seventh Ave. in September.
In the nine months ended March 31, earnings were up 122% to $8.3 million, from $3.8 million a year earlier.
Setting a trend
But having two good years does not ensure long-term success-especially in the apparel business. Chaus must continue to ride fashion trends as well as win over Wall Street if it hopes to remain a viable independent company.
"It costs a lot of money to break through, and it's tough for smaller companies to get selling space in stores," says Margaret Mager, a retail analyst at Goldman Sachs.
In the last four years, Chaus has evolved from selling inexpensive career clothes for middle-aged women to offering higher-priced contemporary work clothes geared to a younger crowd. To reach consumers who have ditched tailored suits, Chaus has now filled its line with soft jackets, sweaters and comfortable stretch fabrics. Prices range from $48 for a blouse to $180 for a jacket.
Major chains such as Macy's East and Lord & Taylor say sales are strong and they are adding more Chaus products.
"They've understood women are dressing differently today, wearing outfits they can dress up for work or wear on the weekend," says Marshall Hilsberg, chief executive of Lord & Taylor, where Chaus is one of the fastest-growing brands.
Chaus hasn't always hit the right fashion note. After going public in 1986, the company suffered from fashion missteps and competition from department stores' private-label apparel. When Mr. Chaus fell ill, the company no longer could depend on the strong relationships he had developed with retailers.
Over the years, Mrs. Chaus, who has always handled fashion and merchandising, had to pump nearly $60 million of her own money into the firm to keep it going. Industry insiders say she has learned a great deal in the last decade and is now better equipped to handle the managerial role she took on after her husband's death.
There have still been problems, though. Mr. Grossman, who was hired in 1994 with a $6 million bonus, departed abruptly at the end of last year. He had built his reputation by helping jump-start Jones Apparel, which sells in the same price range that Chaus is aiming to conquer.
Mr. Grossman declined to be interviewed for this article, but Mrs. Chaus, who reclaimed the CEO title after he left, says he accomplished the task she hired him to do and she has no intention of replacing him.
Another recent setback was the failure to find a niche for the licensed Nautica women's sportswear line, which debuted in 1996 just as Tommy Hilfiger and Ralph Lauren successfully launched new women's lines. The license was terminated last October.
Earnings should triple
With strong earnings and lower debt, Mrs. Chaus believes the company finally has the sound financial base as well as the right fashion formula to make a bigger splash. Earnings for the year ending June 30 are projected to nearly triple to about $11 million, and Mrs. Chaus says the company is looking to achieve a 30% increase in net income next year.
Industry observers praise the decision to add her name to the label, and say the designs have not suffered since Mr. Grossman left.
"Business is very strong," says Kathy Bufano, an executive vice president at Macy's East, adding that the trick is "to continue what they've started."
In addition to honing her own managerial skills, Mrs. Chaus has assembled a strong team of top executives in the last four years, including Judith Leech, vice president of design.
The new marketing efforts should help further the turnaround. Chaus has hired ad agency Frierson Mee + Kraft Inc., whose executives have worked on campaigns for big brands including Calvin Klein.
But Mrs. Chaus has yet to impress Wall Street. Investors remain cool to the stock, given the company's small market cap of about $75 million, with most of the shares in Mrs. Chaus' hands.
The stock is trading at around $2.75, with a multiple of about 5, versus Jones Apparel, with a multiple of 19. Chaus is actively seeking analyst coverage in |
