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Jones Apparel CFO pleased with second quarter results

30
Jul '08
Jones Apparel Group Inc reported results for the second quarter ended July 5, 2008. Reported revenues for the second quarter of 2008 were $829 million versus $904 million for the second quarter of 2007. The previously announced exiting of certain moderate sportswear lines, which was substantially complete by December 31, 2007, was the primary driver of the period over period decrease.

The Company reported earnings per share from continuing operations of $0.13 for the quarter, as compared with a loss per share of $0.48 in the same period last year. Adjusted earnings per share from continuing operations for the second quarter of 2008 were $0.20, as compared with $0.17 for the same period last year (as detailed in the accompanying schedule).

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 exiting of the moderate sportswear lines and the repositioning of the l.e.i. brand.

The following notable events have recently occurred:
-- Successful launch of the l.e.i. program with Wal-Mart;
-- Acquisition of Rachel Roy brand;
-- Strategic investment in international licensing partner GRI Group Limited;
-- Collaboration between Nine West Group and New Balance to create a fashion-lifestyle footwear collection; and
-- Final settlement of the accelerated share repurchase program.

Wesley R. Card, Jones Apparel Group President and Chief Executive Officer, stated, "Our second quarter results exceeded our expectations in the midst of the challenging economic environment. We are especially pleased with the results in our vertical retail operations, which were profitable for the quarter. Comparable store sales for all of our concepts were essentially flat for the period, and we achieved a 5.8% increase in comparable store sales in our footwear stores. We believe our focus and efforts on store level execution and product quality are bearing fruit."

Cash provided by continuing operating activities during the quarter was $98 million, compared with cash used by continuing operations of $27 million in the same period last year. The improvement in cash flow was largely driven by improved working capital management, the receipt of an income tax refund during 2008 and the absence of the final payment associated with the exiting of the Polo Jeans Company business.

John T. McClain, Jones Apparel Group Chief Financial Officer, commented, "Our financial position remains strong. Our on-hand cash balances increased over $120 million to $322 million versus the first quarter of 2008. Our revolver continues to be undrawn, and total debt balances remain unchanged at approximately $780 million. As a result of our efforts, our debt to total capitalization ratio, net of cash, is 18.6%. We will continue to control our expenses and to focus on our inventory and supply chain management throughout theremainder of 2008."


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