NEW YORK — Jones Apparel Group on Thursday posted a decline in third-quarter profits due in part to the sale of Polo Jeans Co. as well as wholesale sales to 90 fewer Federated Department Store doors than last year.
For the three months ended Sept. 30, net income fell 18 percent to $63 million, or 56 cents a share, from $76.8 million, or 65 cents a share, in the same year-ago quarter. Adjusted earnings per share, which excludes the impact of severance charges and strategic initiative costs, was 63 cents versus 76 cents a year ago. The adjusted EPS for the quarter was 3 cents below the consensus estimate of Wall Street analysts. Revenues dropped 6.5 percent to $1.24 billion from $1.33 billion. Excluding sales from the Polo Jeans division a year ago, revenues last year were $1.25 billion. The current quarter's revenues included a 6.9 percent drop in sales to $1.22 billion from $1.31 billion.
For the nine months, net income dropped 42.6 percent to $125.5 million, or $1.10 a diluted share, from $218.6 million, or $1.82, in the same year-ago period. Revenues declined by 8.4 percent to $3.53 billion from $3.85 billion.
While the company said the sale of Polo Jeans Co. affected sales, Peter Boneparth, president and chief executive officer, said during a conference call to Wall Street that he was pleased with results, adding that "revenue was flat and our operating margin in our core wholesale business was up." Barneys New York performed extremely well, Boneparth also said. But overall, there were challenges, mostly from the impact of 90 Federated store closures.
The ceo noted that the wholesale better apparel business was a "standout" in the quarter. He cited the Gloria Vanderbilt division and its denim group, and Barneys, as two businesses that exceeded plan.
Boneparth told analysts that all of the brands in the better business performed very well, from Anne Klein Bridge to Jones Signature and Jones Dress, to name a few. "As we continue observations about the strength or lack of strength of our particular brands, with the customer voting like she's never voted before and again in light of the diminished real estate, it is a very safe assumption that, as I've said earlier, we believe we are actually picking up market share with our core customers going forward, and this bodes well certainly for 2007 in our core better business."Boneparth also announced two additions for next year: Anne Klein Designer and Nine West Denim, an exclusive opportunity with Federated, with more than 300 doors. Boneparth told analysts that the company believes there are growth opportunities in 2007 for its ready-to-wear outlet business.
Howard Socol, ceo of Barneys, said the upscale luxury retailer's same-store sales grew 12.4 percent in the quarter, which is on top of a 12 percent gain last year. "We're looking forward to a solid performance in the Christmas period. We're also planning on six new stores next year, four co-ops and two flagships in San Francisco and Las Vegas." This year, Barneys added two flagships, four co-ops and one outlet store.
Separately, the Jones board approved a 16.7 percent increase in the quarterly cash dividend to 14 cents per share from 12 cents, payable on Dec. 1, to shareholders of record as of Nov. 17.
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