Aug 2, 2010
Jones Apparel profit beats Street on strong sales
Aug 2, 2010
NEW YORK, July 28 (Reuters) - Jones Apparel Group Inc reported (JNY.N) better-than-expected quarterly earnings as the company benefited from a pickup in orders from department stores, solid jeans sales and less discounting, sending its shares up more than 5 percent.
Overall revenues, which includes net sales and licensing income, rose 6.9 percent to reach $859.6 million, beating Wall Street forecasts. Chief Executive Wes Card said the company's shoes and its Gloria Vanderbilt jeans line had performed particularly well.
In a regulatory filing, Jones said it expects 2010 full year revenue to range between $3.61 billion and $3.7 billion, above Wall Street estimates.
In an interview with Reuters, Card warned that consumers are still cautious because of the uncertain economy.
"The consumer is probably a little confused and uncertain right now," Card said.
Still, Card said that the company plans to raise prices in 2011, even though the costs of cotton and leather had begun to moderate after rising sharply this year.
"Wage rates are up, currency is up and we are going to see pressure on costs," Card said.
Card said he has seen little pull-back from department stores on inventories, despite concerns earlier this month that top retailers may face another round of discounts as consumer demand remains tepid.
"We're not completely booked but we're booked pretty much for the balance of the year," Card said.
The company's shares rose 5.2 percent to $17.55 in early trading on the New York Stock Exchange.
Jones Apparel's wholesale business, which makes up more than 80 percent of sales, supplies retailers ranging from Neiman Marcus Group [NMRCUS.UL] Kohl's Corp (KSS.N) and Nordstrom Inc (JWN.N) to Wal-Mart Stores Inc (WMT.N) and Sears Holdings Corp's (SHLD.O) Kmart.
The company, whose portfolio includes Nine West, Jones New York and Anne Klein, said its net income for the second quarter ended July 3, was $25.7 million, or 30 cents per share, nearly double the $13.1 million, or 15 cents per share, it earned a year earlier.
Excluding one-item items, Jones apparel earned 45 cents per share. Analysts on average were expecting earnings of 34 cents per share on revenues of $830.5 million, according to Thomson Reuters I/B/E/S.
During the quarter, Jones completed its acquisition of the upscale shoemaker Stuart Weitzman. Card said the deal would begin to meaningfully contribute to results later this year.
Jones Apparel, based in New York, said it closed 41 retail locations, ending the quarter with 880 locations. It expects to close an additional 80 unprofitable locations by the end of 2010.
Card said that by the end of the year, 70 percent of its stores would be outlets, which he said was "well-balanced" and that next year, any store closings would be done on a door-by-door basis based on when leases expire.
(Reporting by Phil Wahba, editing by Gerald E. McCormick, Dave Zimmerman)
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