NEW YORK — The ghost of the Christmas just past visited Jones Apparel Group’s bottom line.
With higher markdowns and more off-price selling than expected, the vendor reduced fourth-quarter guidance Friday.
Earnings for the quarter ended Dec. 31 are now slated to range from 28 cents to 30 cents, well below previous guidance of 40 cents to 45 cents. Last year, the firm turned in fourth-quarter profits of 33 cents.
Chief executive officer Peter Boneparth said that, despite the detrimental impact on profits, the decision to move more goods through off-pricers helped keep inventories in-line.
“As good as things were in the first half, they became increasingly difficult in the back half,” Boneparth said on a conference call.
The challenging environment is anticipated to continue. The company reduced earnings projections for 2005 to a range of $2.75 to $2.90 from the $3 to $3.10 previously anticipated. That new guidance represents a 15 to 21 percent increase over 2004 projected earnings.
Investors reacted to the warning by trading shares of the firm down $2.30, or 6.4 percent, to $33.44 on the New York Stock Exchange Friday.
Jones will hold another conference call to give final results of the quarter and year on Feb. 16.
Part of the problem was that consumers didn’t get revved up about apparel and footwear, two of Jones’ bread-and-butter categories, until late in the season.
“Better apparel and footwear clearly were increasingly promotional,” Boneparth said. This prompted the stores to try to cancel their orders with the vendor, which pushed more goods to off-pricers. Since other vendors were apparently doing the same, an excess of supply kept prices down, even for the off-price channel.
“We continue to learn about the buying patterns in the fourth quarter, and most of our business is being very, very gift-driven, very item-driven,” Boneparth said.
January is also no longer purely a clearance month, with at least some consumers, armed with gift cards, picking up new fashions, he said.
Part of the quarter’s weakness came from the Jones New York Signature casual better collection, which first hit stores last spring.
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?"