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Restructuring Costs Hurt Jones 3Q Net

Third-quarter results at Jones Apparel Group were hurt by restructuring charges, but it didn't appear to have any major implications for fiscal 2005.

NEW YORK — Third-quarter results at Jones Apparel Group were hurt by restructuring charges, but it didn’t appear to have any major implications as the company affirmed its expectations for fiscal year 2005.

For the three months ended Oct. 1, income fell by 19.8 percent to $76.8 million, or 65 cents a diluted share, from $95.8 million, or 77 cents, in the same year-ago quarter. Excluding the impact from one-time costs in connection with a strategic review of operations, earnings per share were 76 cents in the current quarter.

Total revenues were up 2.4 percent to $1.33 billion from $1.3 billion, on a 2.3 percent gain in sales to $1.31 billion from $1.28 billion and on licensing income. Wholesale better apparel sales declined 8.9 percent to $396.7 million, while wholesale moderate apparel fell 3.2 percent to $337.8 million. As for footwear and accessories, wholesale sales dipped 1.8 percent to $262.2 million. Sales at high-end chain Barneys New York rose 12.1 percent, while sales from company-owned footwear and ready-to-wear stores decreased by 2.9 percent.

Revenues for 2005 are forecast in the $5 billion to $5.1 billion range, and projected earnings per share, excluding restructuring charges, are expected to equal or exceed $2.39, the company said.

Peter Boneparth, president and chief executive officer, said during the investor conference call that some of the company’s brands, such as Gloria Vanderbilt, did well.

“We were quite pleased with the financial performance of our wholesale better apparel segment in particular. Gloria Vanderbilt certainly has been an outperformer and Barneys New York [has] exceeded prior year’s period sales and operating profits,” the ceo said.

The ceo said the Jones Collection had shown sales increases over the prior year, and the Nine West apparel brand was performing well and had increased its store counts. In addition, while competitors may be talking about the decline in their core denim business, Boneparth said the misses’ moderate denim business, in which Gloria Vanderbilt competes, has not declined at all.

Boneparth said the company’s brands have a long-term ability to grow strategically with Federated Department Stores, based on talks with the retailer, as it begins evaluating its combined business following the merger with May Department Stores.

This story first appeared in the October 27, 2005 issue of WWD.  Subscribe Today.

“We have been informed by Federated that many of the May company stores are underpenetrated” in certain brands such as Nine West, Jones and Anne Klein, he said.

Boneparth said while part of 2006 will be a bit choppy due to merger-related store closings, by the end of 2006 and going into 2007, Jones expects its Federated business to improve.

Shares of Jones climbed $1.40 to close at $28.24 in trading Wednesday on the New York Stock Exchange. Nearly 3 million shares exchanged hands compared with an average trading volume of 739,111 shares.