By  on August 2, 2007

Jones Apparel Group, which reported a second-quarter loss and lowered full-year guidance on Wednesday, said its board agreed that Fast Retailing Co. Ltd.'s $900 million cash offer for Barneys New York was superior to a previously accepted bid from Dubai-based Istithmar.

President and chief executive officer Wes Card, who replaced Peter Boneparth last month, said the company was not for sale and acknowledged there have been no offers for it. He intends to emphasize core brands: Jones New York, Anne Klein, Nine West and Gloria Vanderbilt. "Focusing on quality is built into my DNA at Jones," Card said. The board is "committed to investing in the good opportunities we have here."

"My first order is to develop a good strong plan for 2008 that we can execute against,'' he said in an interview. "We need to show the shareholders more consistency."

The company is working on its wholesale relationships, from strategizing to working on how to grow, Card said. He didn't rule out acquisitions, saying that Jones "is always looking" with an eye to "enhance shareholder value." Still, Card's plan for turning around Jones seems more focused on internal changes and getting those initiatives in place before adding brands.

Meanwhile, Jones' agreement with Istithmar, a private equity and alternative investment house, remains in place and the firm has "until the end of business on Friday" to disclose whether it wants to match the offer, Card said.

Jones said Tuesday that it had received the offer from Tokyo-based Fast Retailing, the owner of fast-fashion chain Uniqlo and an investor in contemporary brand Theory, which is not contingent on due diligence and can be closed quickly. The apparel giant on June 22 entered into an agreement to sell the luxury Barneys chain to an affiliate of Istithmar for $825 million in cash, subject to purchase-price adjustments. Jones would be required to pay a termination fee of $22.7 million if it withdraws from the accord.

Neither the executives at Istithmar nor the firm's bankers at Peter J. Solomon Co. could be reached for comment.

A spokesman for Fast Retailing said, "We are very pleased with the board's decision to declare our offer superior. Fast Retailing has the highest respect for the Barneys brand, management and creative teams, and would be an excellent strategic partner."Jones said separately that for the quarter ended July 7, the company posted a loss of $47.1 million, or 44 cents a diluted share, compared with income of $36.6 million, or 32 cents, in the same year-ago period. The most recent quarter included a write-down associated with the brands that the company has decided to sell. Excluding results of discontinued operations and restructuring costs, adjusted earnings were 17 cents a diluted share versus 39 cents last year. Total revenues fell by 2.2 percent to $903.9 million from $923.9 million, which includes a sales decline of 1.7 percent to $894.5 million from $909.6 million.

For the six months, the loss was $800,000, or 1 cent a diluted share, against income of $62.5 million, or 55 cents, in the same year-ago period. Total revenues slipped by 1 percent to $1.98 billion from $2 billion, which included a slight decline in sales by 0.7 percent to $1.96 billion from $1.97 billion.

Jones said it expects 2007 full-year adjusted earnings per share to be between $1.28 and $1.34, versus previous guidance of $1.95 and $2.05.

The company expects to complete the sale of certain smaller sportswear brands, including moderate apparel brand Erika and the footwear and accessories label Pappagallo, which it determined were not necessary for its core operation, Card said.

Jones' plan is to concentrate on the upper moderate market because "We're not really geared to do entry-level moderate price points," Card said.

To continue reading this article...

To Read the Full Article

Tap into our Global Network

Of Industry Leaders and Designers

load comments
blog comments powered by Disqus