Jones Apparel gross profit margin up in Q3

31 Oct '08

4 min read

Jones Apparel Group Inc reported results for the third quarter ended October 4, 2008. Revenues for the third quarter of 2008 were $965 million, as compared with $1.028 billion for the third quarter of 2007.

The exit from certain moderate sportswear lines, which was substantially complete by December 31, 2007, impacted the quarter by approximately $65 million and was the primary driver of the period-over-period decrease. Gross profit margin increased 170 basis points to 33.5% for the quarter, reflecting the exit from the moderate sportswear lines and the increased relative percentage contribution of the Retail segment of our business.

The Company reported earnings per share from continuing operations of $0.32 for the quarter, as compared with $1.37 in the same period last year.

Results for the quarter were impacted by the bankruptcy filings of two regional department store customers ($4.2 million pre-tax, $0.03 earnings per share) and a corresponding reduction in shipping volumes. Adjusted earnings per share excludes the effects of the sale and operating results of Barneys New York, which was completed in September 2007, the costs related to the exit from the moderate sportswear lines and the repositioning of the l.e.i. brand.

The following notable events have recently occurred:

* expansion of the l.e.i. franchise through an exclusive footwear license agreement with Steve Madden, Ltd. and through other license agreements for intimate apparel, sleepwear, handbags and sunglasses;
* launching of a dedicated e-commerce site for the Jones New York brands (www.jny.com);
* opening of a new-concept store, ShoeWoo, which houses multiple footwear brands in one location; and
* completion of the remodeling of the Nine West flagship store in New York City.

Wesley R. Card, Jones Apparel Group President and Chief Executive Officer, stated: "As indicated in our release earlier this month, our results reflect the challenging economic environment and drop in consumer confidence and spending levels. We are managing through the current economic turmoil by remaining committed to our strategy of enhancing our core brands to improve performance and increase market share."

"The strategies we began implementing last year, combined with new product initiatives, have revitalized and strengthened our ability to better manage during these volatile times."

Mr. Card continued: "The comparable store sales results of our wholesale customers, along with other retail sales trends, declined rapidly as we moved through the quarter."

"Our own chain of retail stores had positive comparable store sales in the combined July and August time period but experienced a significant slowdown in September as consumer confidence plummeted. The consumer reacted to the negative financial news and economic outlook by spending less. As a result, our comparable store sales were down more than8% in September."

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