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.”
A Stella McCartney sketch of a custom dress made from protein-based silk in partnership with biotech lab Bolt Threads. The dress will be displayed at The Museum of Modern Art's upcoming design exhibition, "Items: Is Fashion Modern?"