Jones Apparel Group on Wednesday reported a net loss of $822.9 million for the fourth quarter — but its shares soared almost 10 percent anyway.
The reason the shares went one way while earnings were headed in the opposite direction? The results beat Wall Street’s expectations and analysts applauded Jones’ strong balance sheet and drive to expand into areas including private label. Because of these factors, president and chief executive officer Wesley Card believes Jones is well positioned despite the recession.
“Our brands really fit in with where the consumer is shopping. They are trusted value brands at good price points. It’s a tough time, [but we’re] in a good spot,” Card told WWD.
The company warned Wall Street last month that quarterly results would be hit with a substantial impairment charge, and its net loss of $822.9 million, or $10.08 a diluted share, also reflected deep discounts and promotions by retail customers over the tumultuous holiday period.
However, stripping out impairment and other charges, adjusted earnings per share came to a loss of 4 cents a share, 1 cent less than analysts’ consensus estimates. Wall Street applauded the results, and Jones’ shares closed Wednesday’s New York Stock Exchange session at $3.58, up 32 cents, or 9.8 percent.
The deficit for the three months ended Dec. 31 came against a loss of $89.8 million, or $1.06, in the year-ago quarter and included an $813.2 million charge for goodwill impairment. Boosted by the introduction of its L.E.I. brand at Wal-Mart stores, total revenues inched up 1 percent to $846.9 million from $838.5 million. In its retail unit, comparable-store sales were down 6.1 percent and fell 6.4 percent last month.
Card told Wall Street during a conference call, “Virtually all retailers concentrated on promoting and moving inventory, and we did the same thing in our own chain of retail stores. On the positive side, it’s evident that unit sell-throughs were up significantly, but this is a good thing [because] it is essential that inventories have cleared and remain under control in this environment.”
He also told analysts that consumers are still “very much in a buy-now, wear-now mode and more than ever buying only items they truly need.” The company believes it is well positioned for fall in suits and dresses.
Jennifer Black, analyst at Jennifer Black & Associates, observed, “Jones is offering merchandise to wholesale accounts at higher initial markups, with enough cushion to allow for additional markdowns while still protecting margins. Jones is able to do this without raising actual prices of merchandise because it has seen reductions in its own costs of sourcing and transportation costs.”
Despite the tough retail climate, Jones has some breathing room, with ample cash and limited debt. The company recently completed a $600 million amended and restated bank credit agreement. According to John T. McClain, chief financial officer, Jones ended the quarter with $338 million in cash, an increase of $35 million from a year ago. The company’s debt balances remain at $780 million, unchanged from last year.
Breaking News: @louisvuitton's men's artistic director @mrkimjones is leaving the French fashion house after nearly 7 years. Jones joined Louis Vuitton in 2011, following a three year tenure as creative director of British luxury goods brand Alfred Dunhill. Jones is to exit Louis Vuitton after showing his fall 2018 collection for the brand in Paris on Thursday. Read the full exclusive story on WWD.com. Link in bio. #wwdnews #wwdfashion
For men’s fall 2018, @giuseppezanotti drew on elements from streetwear, sport, biker, combat and rock ‘n’ roll. Pictured here are a pair of shoes from the collection, featuring zippers, rhinestones, and silver hardware. Head to WWD.com to see a roundup of the accessories from Milan’s men’s fall 2018 shows. #wwdfashion (📷: Andrea Delb)
To celebrate the 25th anniversary of @ralphlauren’s snowboarding collection, the brand is mining its archives. The iconic brand is reintroducing vintage styles and dropping new designs for a color capsule that will be available in Ralph Lauren stores and @openingceremony on January 25. The capsule will consist of 10 pieces, including the Snow Beach Pullover, pictured here, which is a collector’s item that rapper Raekwon wore in Wu-Tang Clan’s “Can It Be All So Simple” video. #wwdfashion (📷: Tom Gould)
For @rochasofficial’s pre-fall 2018 collection, creative director Alessandro Dell’Acqua channeled the sophisticated and intriguing Catherine Denevue in the film “Belle de Jour.” Polished collarless coats, midi skirts, suits and ’60s graphic motifs were all featured in the collection, adding a sense of discreet luxury. See the rest of the photos on WWD.com #wwdfashion
“We tried to produce clothing of that couture quality, but the most daunting part was that we only had a matter of days [to do it],” said costume designer Lou Eyrich, who recreated Gianni Versace’s iconic looks for @americancrimestoryfx. Eyrich searched online retailers and vintage shops for original pieces from the design house and for @penelopecruzoficial, who plays Donatella Versace. Head to WWD.com to read how she created the Versace world. #wwdfashion
Only three months after her stellar debut catwalk season, @kaiagerber has inked her first big design collaboration –– with @karllagerfeld. The collection blends Lagerfeld’s Parisian chic aesthetic and the model’s signature West Coast casual style via RTW, accessories, footwear and more. The #KarlLagerfeldxKaia collection will launch in September with a series of events. Get all the details on WWD.com. #wwdnews #wwdfashion
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews