NEW YORK — Jones Apparel Group Inc. is in retail growth mode.
The company said Wednesday that it is looking to open more of its own stores to diversify in the face of the consolidation that is sweeping the department store sector. The company said it will open 15 Anne Klein New York accessories retail stores this year, as well as accelerate store openings for its Bandolino concept. The company also is preparing for the opening of a Barneys New York flagship in Boston shortly, as well as a store in Dallas in the fall. Peter Boneparth, president and chief executive officer of Jones, added the company is looking at sites for additional stores in 2007 and beyond.
the fall. Peter Boneparth, president and chief executive officer of Jones, added the company is looking at sites for additional stores in 2007 and beyond.
Jones also is looking at possible acquisitions, such as in retail and in opportunities in the contemporary sector where the company can add value and make them bigger businesses than they are right now, Boneparth said, without providing details.
The apparel and footwear group revealed the strategy as it reported a 63.3 percent jump in profits for the fourth quarter ended Dec. 31 to $55.7 million, or 48 cents, compared with $34.1 million, or 28 cents, in the same year-ago quarter.
The consensus among Wall Street analysts was earnings per share of 45 cents, according to a survey by Thomson Financial. Excluding restructuring expenses and costs associated with its strategic operating initiatives, EPS would have been 51 cents a share. Total revenues rose 12.8 percent to $1.22 billion from $1.08 billion, which included a sales gain of 13.1 percent to $1.2 billion from $1.06 billion and a 7.2 percent decline in licensing income to $19.4 million from $20.9 million.
For the year, income was down 9.1 percent to $274.3 million, or $2.30 a share, from $301.8 million, or $2.39, a year ago. Revenues gained 9.1 percent to $5.07 billion from $4.65 billion, which included a sales gain of 9.2 percent to $5.01 billion from $4.59 billion and a 4.4 percent increase in licensing income to $59.6 million from $57.1 million.
"On a relative basis, the wholesale better apparel business performed better than last year. Having said that, it was still too promotional for my taste," said Boneparth during a conference call to Wall Street analysts.Boneparth also spoke about the company's strategic operating initiatives, in which Jones has targeted $100 million in savings. The company expects savings in 2006 to be $30 million, which the ceo said will "largely offset the impact we see from the Federated/May consolidation." The balance of the savings is expected in 2007.
"We feel that we're very well positioned to weather the changes in the wholesale channel through 2006 and we are extremely well positioned to benefit from what we're doing internally in 2007," Boneparth said.
He noted that Barneys New York is an "appreciably more valuable asset today than when we bought it a year ago." The ceo disclosed that Barneys' comps were up 8 percent in the quarter and boasted that the high-end specialty retailer outperformed its luxury peers by a wide margin. In the women's area, leather goods, footwear, accessories and handbags were strong performers, while the men's and women's Co-op business also performed well. During a question-and-answer session with analysts, Boneparth pointed out that, while the flagships and Co-op concept are the two primary drivers, there are indications from Shanghai and Dubai that there "clearly is interest in the Barneys brand outside the United States."
Barneys New York already operates stores in Japan through a venture with Isetan. If it were to expand into Shanghai and Dubai, it would butt heads with Saks Fifth Avenue, which has opened or revealed plans to open licensed units in both regions.
Despite the improved wholesale sales in the better apparel business and spectacular performance contribution from Barneys, Boneparth said Jones is "cautious" because of consolidation factors at retail. He cited the following as contributing to the uncertainty: Federated/May; Sears and its merger with Kmart; the acquisition of Carson Pirie Scott by Bon-Ton, which hasn't closed yet; Saks Fifth Avenue considering a sale of Parisian, and the uncertain state of Lord & Taylor, which Federated has put on the block.
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