Interviews
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Jones Apparel continues to evaluate new concepts
01 May '09
6 min read
Mr. Card continued: "While overall results are still reflective of low consumer confidence and spending levels, we believe that there is enhanced value to be realized in our businesses through continued prudent cost management and creative marketing and branding. The time is also right to implement our comprehensive strategy to return our retail segment to profitability, as we have many leases expiring in the next two years."
John T. McClain, Jones Apparel Group Chief Financial Officer, commented, "We continue to manage costs and have identified $20 million in annual savings in 2009, which is in addition to the $33 million in annual SG&A savings we implemented at the end of 2008 and the $17 million of cost increases we avoided by freezing salaries and wages."
Cash used by operations during the quarter was $139 million, compared with cash used by operations of $66 million in the prior year. The year-over-year change in cash used is primarily due to changes in working capital flows, the receipt of a $23 million tax refund in the prior year and lower operating earnings. Working capital flows were impacted by the timing of cash disbursements and less seasonal inventory decreases due to an inventory increase to support the Company's l.e.i. business. The Company continues to have no amounts drawn under its $600 million of committed revolving credit facilities.
The following notable events have recently occurred:
• announced the launch of Rachel Rachel Roy, a contemporary line, including sportswear, footwear and accessories, which will debut in August 2009;
• began selling New Balance for Nine West at select Nine West and New Balance stores, on-line at www.ninewest.com and internationally;
• launched an e-commerce site for our Anne Klein brand at anneklein.com;
• introduced Nine Loves, a Nine West rewards program, at our retail stores and on ninewest.com;
• announced an improvement strategy to return Company-owned retail stores to profitability; and
• near completion of new multi-year senior secured credit facility and debt tender offer to enhance financial flexibility.
As announced on April 1, 2009, the Company is pursuing a new senior secured credit facility for up to $650 million, which will replace its existing $600 million credit facility that expires in May 2010. The new three-year facility will provide the Company with significantly greater flexibility, while providing term certainty to weather the current difficult economic environment. The Company concurrently undertook a debt tender solicitation for its $250 million of notes due November 2009. Approximately $240 million of notes will be tendered in connection with the offering. The Company will primarily use cash on hand to fund this debt retirement.
Mr. McClain continued: "Our financial position remains strong. We ended the quarter with $194 million of cash, approximately the same as last year, and our revolver continues to be undrawn. We anticipate that we will close on our new credit facilities and debt tender within the next week. With the closing of these transactions, we will reduce our outstanding debt by over $240 million and extend the tenor of our bank facilities to April 2012. The new agreement reduces financial covenants and provides ample liquidity for our operations. We are very pleased to be completing these transactions during such an uncertain time in the capital markets."
Mr. Card concluded: "Consistent with past actions, we are taking the necessary steps towards operational excellence, including aggressive inventory management, optimizing our distribution channels and updating our technology infrastructure. We remain cautious in our outlook for 2009, and as the year progresses, our focus will be on financial stability, maintaining our market share and positioning the Company for the ultimate recovery."
John T. McClain, Jones Apparel Group Chief Financial Officer, commented, "We continue to manage costs and have identified $20 million in annual savings in 2009, which is in addition to the $33 million in annual SG&A savings we implemented at the end of 2008 and the $17 million of cost increases we avoided by freezing salaries and wages."
Cash used by operations during the quarter was $139 million, compared with cash used by operations of $66 million in the prior year. The year-over-year change in cash used is primarily due to changes in working capital flows, the receipt of a $23 million tax refund in the prior year and lower operating earnings. Working capital flows were impacted by the timing of cash disbursements and less seasonal inventory decreases due to an inventory increase to support the Company's l.e.i. business. The Company continues to have no amounts drawn under its $600 million of committed revolving credit facilities.
The following notable events have recently occurred:
• announced the launch of Rachel Rachel Roy, a contemporary line, including sportswear, footwear and accessories, which will debut in August 2009;
• began selling New Balance for Nine West at select Nine West and New Balance stores, on-line at www.ninewest.com and internationally;
• launched an e-commerce site for our Anne Klein brand at anneklein.com;
• introduced Nine Loves, a Nine West rewards program, at our retail stores and on ninewest.com;
• announced an improvement strategy to return Company-owned retail stores to profitability; and
• near completion of new multi-year senior secured credit facility and debt tender offer to enhance financial flexibility.
As announced on April 1, 2009, the Company is pursuing a new senior secured credit facility for up to $650 million, which will replace its existing $600 million credit facility that expires in May 2010. The new three-year facility will provide the Company with significantly greater flexibility, while providing term certainty to weather the current difficult economic environment. The Company concurrently undertook a debt tender solicitation for its $250 million of notes due November 2009. Approximately $240 million of notes will be tendered in connection with the offering. The Company will primarily use cash on hand to fund this debt retirement.
Mr. McClain continued: "Our financial position remains strong. We ended the quarter with $194 million of cash, approximately the same as last year, and our revolver continues to be undrawn. We anticipate that we will close on our new credit facilities and debt tender within the next week. With the closing of these transactions, we will reduce our outstanding debt by over $240 million and extend the tenor of our bank facilities to April 2012. The new agreement reduces financial covenants and provides ample liquidity for our operations. We are very pleased to be completing these transactions during such an uncertain time in the capital markets."
Mr. Card concluded: "Consistent with past actions, we are taking the necessary steps towards operational excellence, including aggressive inventory management, optimizing our distribution channels and updating our technology infrastructure. We remain cautious in our outlook for 2009, and as the year progresses, our focus will be on financial stability, maintaining our market share and positioning the Company for the ultimate recovery."
Jones Apparel Group Inc
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