Revenue inches down at Jones Group in Q1
The Jones Group Inc. reported results for the first quarter ended March 31, 2012. Revenues for the first quarter of 2012 were $936 million, as compared with $961 million for the first quarter of 2011.
The Company reported adjusted earnings per share of $0.31 for the first quarter of 2012, as compared with adjusted earnings per share of $0.38 for the same period last year. The adjusted results exclude charges related to the impact of severance, asset impairments in retail locations to be closed and other costs related to restructuring activities, certain acquisition-related costs and other costs not considered relevant for period-over-period comparisons (see reconciliation of adjusted earnings to reported earnings in the accompanying schedule).
As reported under generally accepted accounting principles ("GAAP"), the Company reported a first quarter loss per share of ($0.01) in 2012 and income of $0.30 per share in 2011. The 2012 and 2011 first quarter results include, among other items, costs and charges of approximately $28 million ($18 million after tax) and $9 million ($6 million after tax), respectively, related to the acquisition of Stuart Weitzman. In addition, the first quarter of 2012 also includes $12 million ($8 million after tax) of restructuring and strategic review costs.
Wesley R. Card, The Jones Group Chief Executive Officer, stated: "We are pleased with the results we achieved in the first quarter, particularly our improved gross margin, which exceeded expectations. Our gross margin improvement of 230 basis points was the result of the inclusion of Kurt Geiger in the quarter and improvement in many segments as a result of conservative inventory planning and control. Our sales registered $936 million and were within expectations.
“The warmer weather during the quarter, coupled with an early Easter holiday, resulted in stronger sales in all retail channels during the period than expected. Our footwear and accessories and jeanswear groups performed the best at retail, while traditional sportswear remained more challenging and promotional. "
Cash used by operating activities during the first quarter of 2012 was $60 million, compared with $137 million in the prior year period. The current year results reflect a lower level of required investment in working capital, somewhat offset by lower earnings. At March 31, 2012, the Company had $147 million in cash and no amounts drawn under its $650 million of committed revolving credit facilities.
John T. McClain, The Jones Group Chief Financial Officer, commented: "Our financial position remains strong. We ended the quarter with $147 million in cash and our revolver undrawn. Our approach to inventory commitments continues to be conservative, and we continue to emphasize tight expense control. We believe these actions will enable us to continue to improve margins and maintain a strong balance sheet."
Mr. Card concluded: "On a macroeconomic level, we are encouraged by generally rising consumer confidence and positive retail trends. While we believe these trends should continue, the economic environment still contains mixed signals and consumer spending is unpredictable. We have made major enhancements to our fall product offerings across our brands, most importantly to our sportswear product lines.