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Jones Apparel Group reports 2009 Q2 results

30
Jul '09
Jones Apparel Group Inc reported results for the second quarter ended July 4, 2009. Reported revenues for the second quarter of 2009 were $804 million, as compared with $829 million for the second quarter of 2008. The decrease in revenues of 3.1% was reflective of overall economic conditions that continue to affect retail sales in general. While the wholesale jeanswear division reported increased revenues of 28.5% compared with the same period in the prior year, revenues declined as expected in the other divisions.

The Company reported adjusted earnings per share ("EPS") of $0.29 for the second quarter of 2009, as compared with adjusted earnings per share of $0.20 in the same period last year. These results exclude charges related to the consent solicitation of noteholders, the cash tender offer for outstanding 4.250% Senior Notes due November 2009 and the termination of the revolving credit facility, and certain other charges.

As reported under generally accepted accounting principles ("GAAP"), the Company reported earnings per share of $0.15 per share for the second quarter of 2009, as compared with earnings per share of $0.12 for the same period last year. The 2009 second quarter results include, among other items, charges of approximately $10 million ($6 million after tax) related to the consent solicitation and tender offer and the termination of the revolving credit facility, and net charges of $8 million ($5 million after tax) related to other cost savings initiatives.

Wesley R. Card, Jones Apparel Group President and Chief Executive Officer, stated: "We are pleased with our results for the second quarter and the effectiveness of our efforts to manage inventories, costs and expenses, which have proven to be critical in navigating through this unique economic situation. Our revenues were slightly higher than our previous guidance and our gross margin improved from last year, even as we provided additional markdown assistance to our customers. Operating margins increased in each of our wholesale businesses and we were profitable in our retail business, both of which were very gratifying in the face of this highly promotional environment."

Cash provided by continuing operating activities during the six months was $74 million, compared with cash provided by continuing operations of $98 million in the same period last year. The year-over-year change in cash provided is primarily due to changes in working capital flows and lower operating earnings.

John T. McClain, Jones Apparel Group Chief Financial Officer, commented: "Our balance sheet, liquidity and cash flow remain strong. We ended the quarter with $113 million of cash and our revolver remains undrawn, after completing the tender offer for approximately $240 million of debt. Our total debt balance is $559 million, $221 million less than a year ago, and our debt to total capitalization ratio, net of cash, is 27.2%. Inventories and expenses are well controlled and at what we believe to be the appropriate level for the current environment. We will, however, continue to keep a close focus on these areas, as well as on our supply chain management, throughout the remainder of 2009."


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