US: Jones Apparel outlook cautious, to sell some businesses
Net income increased to US$47.8m, from $25.8m during last year's quarter as the company said it intends to "exit or sell some of our moderate product lines by year end 2007."
For the period ending 7 April 2007, revenues at the group totalled $1,248.2m versus $1,215.3m for the first quarter of 2006. Jones said that the additional week this year added approximately $28.6m to revenues for the quarter in its retail segment.
Earnings per share were $0.44 for the, as compared to $0.22 in the same period last year.
Jones' president and CEO Peter Boneparth said: "We were pleased with first quarter results in our wholesale better apparel, footwear and accessories segments, our denim and junior businesses and with the performance of our Barney's luxury retail chain, which registered a comparable store sales increase of 10.1%."
Boneparth went on to say that results were disappointing in company-owned retail chains, with same-store sales down 5.0% for the period. This was driven primarily by footwear outlet doors, which declined by 12.3% on a comparable basis.
The company also hinted at the likely sale of product lines, rumoured to be Nine West and Barneys, which has gathered a number of suitors, including Arcadia owner Philip Green.
Boneparth added: "Our continued strategic operational reviews and efforts to improve profitability, and the continued trend of our moderate customers towards differentiated product offerings, has led us to make the strategic decision to exit or sell some of our moderate product lines by year end 2007.
"These product lines will represent net revenues in 2007 of approximately $300m, with estimated combined operating margins in the low single digits.
"We believe that exiting or selling these product lines will strengthen our future operating metrics and allow us to focus primarily on growth opportunities in our remaining wholesale businesses, all of which have strong fundamentals and operate at substantially higher margins."
Jones confirmed that the product lines to be exited would not impact its denim and junior division, which includes labels such as Gloria Vanderbilt, LEI, Energie, GLO, Jeanstar, Grane and others.
The company concluded that it was taking a cautious view of the remainder of the year, and has adjusted its outlook for 2007 to full year adjusted earnings per share of $1.95 to $2.05, compared to 2006 adjusted earnings per share of $2.19.
Jones' board also declared a regular quarterly cash dividend of $0.14 per share to all common stockholders for payment on 1 June 2007.
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