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Jones Apparel Q4 results in line with guidance
11
Feb '09
Jones Apparel Group Inc reported results for the fourth quarter and year ended December 31, 2008. Revenues for the fourth quarter of 2008 were $847 million, as compared with $839 million for the fourth quarter of 2007. Revenues for the full year 2008 were $3,616 million, as compared with $3,849 million for the full year 2007.

The Company's exit from certain moderate sportswear lines, which was substantially complete by December 31, 2007, impacted the year by approximately $270 million and was the primary driver of the year-over-year decrease.

The Company reported adjusted earnings per share from continuing operations (which excludes impairments of goodwill and trademarks in our footwear and accessories businesses, the impact of severance and other expenses related to our restructuring activities, repositioning of the l.e.i. brand and certain other charges) of $(0.04) for the fourth quarter of 2008, as compared with adjusted earnings per share from continuing operations of $0.09 in the same period last year.

Adjusted earnings per share from continuing operations on a full year basis were $0.88 in 2008, compared with 2007 adjusted earnings per share of $1.26 (see reconciliation of adjusted earnings to reported earnings in the accompanying schedule).

As reported under generally accepted accounting principles ("GAAP"), the Company reported a loss of $(10.08) per share from continuing operations for the fourth quarter of 2008, as compared with a loss of $(1.01) per share from continuing operations for the same period last year. On a full year basis, the Company reported a loss from continuing operations of $(9.24) per share and income from continuing operations of $0.45 per share for 2008 and 2007, respectively.

The 2008 results include non-cash impairment charges of approximately $838 million for certain goodwill and trademarks within our Wholesale Footwear and Accessories business. The full year 2007 results also included non-cash goodwill and impairment charges of approximately $166 million, primarily relating to the exited moderates sportswear lines.

Charges in both periods were a result of the Company's required impairment evaluations under GAAP. The 2008 fourth quarter results also include charges relating to the initiation of certain cost reduction actions of $7 million. Those measures are expected to result in annual cost savings of approximately $33 million.

Wesley R. Card, Jones Apparel Group President and Chief Executive Officer, stated: "Our fourth quarter results are in line with the guidance we provided last month. Consistent with the retail industry in general, our operating results were heavily impacted by the highly promotional climate and weak holiday season. We are pleased to have generated positive operating cash flow in a very tough environment and that our financial position remained strong."

Cash provided by continuing operating activities during 2008 was$176 million, an improvement of $56 million when compared with 2007. The improvement in cash flow was largely driven by enhanced working capital management, the receipt of an income tax refund during 2008 and the absence of the final payment associated with exiting the Polo Jeans Company business. The Company has no amounts drawn under its $600 million of committed revolving credit facilities.


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