• First quarter net income reached US$500,000
  • Sales increased 8% to $1bn
  • Gross margin fell 210 basis points 

US clothing company The Jones Group has returned to a first quarter net profit, despite cold weather hurting spring product sales, and dragging down margins.

The company recorded a US$500,000 net income over the quarter ended 6 April, compared with a $1.2m loss in the same period of the prior year. Revenue increased 8% to $1bn from $936m.

"First quarter revenues were in line with our revised expectations, with the jeanswear business registering the largest improvement in operating results," said CEO Wesley Card.

"For other areas of the business, the cold weather negatively impacted seasonal spring product sales and, accordingly, gross margins for the first quarter were approximately 210 basis points below last year. The domestic wholesale footwear and accessories business registered improved operating results; while the international businesses, primarily retail, were negatively impacted by economic conditions and cold weather, particularly in Europe. We expect continued margin pressure in sportswear in the second quarter, as we clear spring merchandise in anticipation of our new and refocused product offerings for fall."

Last week, the company announced plans to close around 170 retail stores, reduce headcount, and optimise its wholesale channel as part of a strategic plan to generate US$40m a year in savings.

Commenting on the moves, Card said: "Our efforts to enhance profitability are showing some early signs of success. We are experiencing growth in the majority of our core brands and are continuing to diversify our portfolio in favour of the areas that we believe offer the greatest opportunity for revenue growth. However, we believe we can do more to strengthen results. The strategic actions announced last week are designed to substantially improve the performance of our domestic retail business, and create operational efficiencies and reduce costs within the wholesale channel. At the same time, we continue to focus on delivering quality products that resonate with our customers."