Jones Apparel Group plans to trim its brand portfolio — and Norton McNaughton and Erika could be among the first to go.
The company, which posted a jump in first-quarter earnings on Wednesday, said it plans to eliminate $300 million in business in the moderate sportswear sector by yearend, but will remain in the category with a limited number of labels that will provide a bigger margin boost to the bottom line. Management did not disclose which brands would be eliminated, but industry sources said Norton McNaughton and Erika were on the block.
"What's most important for us is to start 2008 fresh and to do [that] we need to remove that low-margin business, obviously, from our operating statements," said Peter Boneparth, president and chief operating officer, during a conference call to Wall Street analysts. He did not disclose which businesses the company would sell because of ongoing conversations with retail partners regarding strategies for those labels. Aside from Norton McNaughton and Erika, several analysts and bankers believe Evan-Picone could be sold, although at least one banker believes the label is a candidate for licensing. A decision to drop the Norton McNaughton business would be ironic given that Boneparth ran that company until selling it to Jones, which is what brought him into management of the group.
"It will play out in a variety of different ways, depending on the brand and the customer base," Boneparth told WWD. "It could involve an outright sale, a license or [even] be discontinued entirely. It's too early to tell. However, we will not be leaving the moderate business entirely."
Boneparth declined comment on Barneys New York, which is said to be on the market. As reported in WWD, there's been strong interest from potential buyers from the Middle East. Banking sources said discussions are ongoing.
For the quarter ended April 7, net income for the company rose 85.3 percent to $47.8 million, or 44 cents a diluted share, from $25.8 million, or 22 cents, in the same year-ago quarter, when profits were depressed by retail consolidation. Excluding certain charges for severance and restructuring, earnings per share were 50 cents. Analysts were over-optimistic, however, expecting 60 cents a share.
“I see things on the hanger and I’m, like, ‘I never knew that color worked on me.’ It’s things you necessarily wouldn’t choose to wear, but once you put them on, you see why Janie is who Janie is." — Lily Collins on working with former "Mad Men" costume designer, Janie Bryant on creating looks for her role as Celia Brady's in Amazon series, "The Last Tycoon." 📸@jilliansollazzo #wwdeye
EXCLUSIVE: Sarah Rutson has been tapped to Build New American Fashion Group. The parent of Joie, Equipment and Current/Elliott hired the merchant to rev up its brands and expand its portfolio into designer, beauty and lifestyle categories. Read more on WWD.com, link in bio. #wwdfashion
Michael Kors' $1.3B Jimmy Choo deal has the company squaring off with Coach Inc. as both seek to build American powerhouses. Coach bought Stuart Weitzman in 2015 and Kate Spade just two weeks ago, but Michael Kors' acquisition may be putting pressure on its rival in the new push for scale. #wwdnews (📷: George Chinsee)
Meet actress Lucy Boynton, who plays opposite Naomi Watts in the recently released Netflix series "Gypsy." Boynton stopped by WWD to talk about her upcoming projects and her nomadic lifestyle. Get all the details on WWD.com. #wwdeye (📷: @dandoperalski)