NEW YORK — Higher holiday promotions and some difficulties in better-priced collections put a crimp in Jones Apparel Group’s style in the fourth quarter, dragging profits down 18.4 percent to $34.1 million, or 28 cents a diluted share.
“In some respects we made some product decisions that were clearly not on track with the consumer,” said chief executive officer Peter Boneparth on a conference call Wednesday. “But even against that backdrop, the overall promotional environment led to the vast majority of the issues that we faced.”
The profit drop was in line with Jones’ warning last month that earnings would come in at 28 to 30 cents a share, well below earlier guidance of 40 to 45 cents. Shares of the firm fell 7 cents, or 0.2 percent, to close at $33.70 on the New York Stock Exchange Wednesday.
The quarterly profits compared with earnings of $41.8 million, or 33 cents, a year earlier.
Revenues for the three months ended Dec. 31 advanced 10.5 percent to $1.08 billion from $980.1 million.
“The promotional cadence we saw in our core department store channel over the fourth quarter only continued to validate in our minds the need to continue to differentiate, to reach different customers,” said Boneparth.
In December, Jones acquired retailer Barneys New York for $397.3 million.
Within its existing brands, Jones is also planning to branch out with the launch of Treza, a plus-size retail concept that will feature a range of the firm’s brands, including Jones New York, Gloria Vanderbilt, Bandolino, Kasper and Anne Klein. Three to five Treza stores will open during the second quarter, and as many as 15 of the units might open by yearend.
By business segment, wholesale better-priced apparel had the most difficulty during the quarter, recording an operating loss of $5.3 million, versus earnings of $3 million a year ago. This was juxtaposed with a 12.4 percent increase in sales to $360.3 million.
“I was a little surprised that they ended up with an operating loss on better apparel,” said Tradition Asiel Securities analyst David Griffith. “It just goes to show how really tough the markdown environment was for them.”Within better apparel, the Jones New York Signature casual business, which bowed in stores with spring fashions last year, was slow to adopt the trend toward milder colors for fall and also suffered from a lack of stand-alone pieces for holiday gift giving.
Boneparth reiterated his support of the business, though, and said early spring reads were promising.
Moderate apparel, with brands such as Bandolino and Gloria Vanderbilt, was stronger, producing $10.7 million in operating income, a 20.2 percent rise. Sales of $263.2 million represent a 2.3 percent uptick.
Retailers, after easing out of moderate in favor of a slate of new and rejiggered better brands — such as Signature and Lauren by Ralph Lauren from Polo Ralph Lauren Corp. — are taking another look at lower-priced fashions. “In some cases, there’s a little bit of a rebalancing that’s going on,” said Boneparth.
Jones’ moderate division has also been ramping up its infrastructure to support launches, specifically expanding its business with Sears, Roebuck & Co., which already has an exclusive on the Anne Klein subbrand A-Line.
Wholesale footwear and accessories registered an 18.3 percent drop in operating profits to $26.7 million, while sales increased 15 percent to $252.3 million.
On the footwear front, Dillard’s has dropped the Jones’ Nine West brand from its stores. Boneparth said the business, which was similar to the store’s private label offerings, had already contracted to represent only $5 million in sales, and its shuttering will not have a material impact. At least some of the void is being filled by an uptick in the Easy Spirit business at Dillard’s.
For the year, Jones’ earnings slid 8.2 percent to $301.8 million, or $2.39 a diluted share. This compares with $328.6 million, or $2.48, in 2003. Revenues increased 6.3 percent to $4.65 billion from $4.38 billion.
In 2005, Jones anticipates profits of $2.75 to $2.90 a share, an increase of 15 to 21 percent. Sales are slated to rise to the $5.3 billion to $5.35 billion range.
@fearofgod and @maxfieldla have teamed up on a pop-up installation. The store, located in the gallery space across from Maxfield’s Melrose Ave location, is the site of the brand’s House of God pop-up in which Fear of God founder @jerrylorenzo has created a church-inspired installation. A dozen vintage church pews sit in front of an LED screen playing 90s gospel singers in an effort to re-create an environment akin to a Southern Baptist Church, Lorenzo explained. Read more about the pop-up on WWD.com #wwdfashion (📷: Jennifer Johnson)
Known for his sleek, sophisticated American glamour, Norman Norell is the subject of an upcoming exhibition at @fitnyc. “Norell: Dean of American Fashion,” which runs from February 9 through April 14, will feature approximately 100 ensembles and accessories. His best work is exemplified by the designer’s glittering “mermaid” gowns frosted with thousands of hand-sewn sequins – like the one pictured. (📷: William Helburn) #wwdfashion
For pre-fall 2018, @balmain didn’t let go of the glitz. A crystal embroidered baseball jacket priced at around $40,000 hangs in the “couture” section of the brand’s first men’s pre-collection. Sporting the words “Balmain Army” across the back, the item took around two months to make. “When it was completed, it was like Christmas, it was like, ‘It’s done, it’s exactly what I wanted,’” said Balmain’s creative director @olivier_rousteing during a tour of the collection in a Paris showroom on Monday. #wwdfashion
Eighty degree temperatures and outdoor installations at the annual Art Basel Miami Beach called for bright, elevated beachwear. See more street style pictures on WWD.com. #theyarewearing #ABMB (📷: @lifeinreverie)
Following September’s emotional tribute to her brother Gianni, Donatella Versace wanted to bring the spring show’s deep sense of intimacy to her @versace_official pre-fall collection. Donatella found inspiration in Versace Palazzo in Milan and from Gianni’s opulent apartment. Archival patterns and new motifs were splashed on silk shirtdresses and fitted jersey frocks. See the rest of the photos on WWD.com. #wwdfashion
Demna Gvasalia continues to shake up the Paris fashion calendar — and experiment with new runway timetables for his @vetements_official brand. WWD has learned that Vetements plans to stage its next coed show for the fall 2018 season on January 19 during Men’s Fashion Week in the French capital. Details about the timing and venue have not been confirmed — stay tuned on WWD.com to catch the latest. #wwdnews (📷: @giovanni_giannoni_photo)
@zacposen's go-to holiday gift? Cookies! "I'll usually bake cookies and send them as a gift," said the designer, who recently released his cookbook "Cooking With Zac: Recipes from Rustic to Refined." Get the recipe for his Brown Butter-Chocolate Chip Cookies via link in bio 🍪🍪🍪 #wwdeye #cookingwithzac
For @monsemaison’s pre-fall 2018 collection, Fernando Garcia and Laura Kim honed in on the brand’s many signatures — men’s wear, which was tweaked and feminized through deconstruction, proportion play and lots of bare shoulders. See the rest of the photos on WWD.com #wwdfashion (📷: George Chinese)
On Friday night, @yohjiyamamotoofficial received the Design for Asia Lifetime Achievement Award in Hong Kong. The 75-year-old designer has been celebrated for many years and is best known for his dark and avant-garde tailoring. “In my long career, in design, architecture, [I’ve been to] so many parties, this is the very first time that I have such a warm feeling, I really appreciate this,” Yamamoto said. #wwdfashion (📷: @dominiquemaitre)