NEW YORK -- Merrill Lynch lowered its intermediate-term rating on Jones Apparel Group Inc. to "neutral" from "above average," following the resignation of Andrew Grossman from Jones to join Bernard Chaus Inc.

Jones stock dropped 2 points to 23 1/8, while Chaus stock soared to 3 3/8, a gain of 59 percent. Both trade on the New York Stock Exchange.

As reported Wednesday, Grossman resigned as president of Jones to join the troubled Chaus as new chief executive officer on Nov. 1.

Brenda Gall, analyst at Merrill Lynch, said the downgrade was due solely to Grossman's resignation, adding, "There has been no change in the fundamentals" at Jones.

Merrill continued its long-term "buy" rating on Jones stock.

In the nine months to March 31, Chaus lost $17.1 million as sales dipped 6 percent to $170.2 million. Results for the fourth quarter have not been released, but are expected to show continuing losses.

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