By  on October 11, 2011

NEW YORK — The Jones Group Inc. said Tuesday it is in discussions with Israeli firm Delta Galil Industries Ltd. regarding the sale of its jeanswear division for between $350 million and $400 million.

Jones also said it expects discussions to be “concluded or terminated within a month.” The company added that currently no agreement has been reached.

Should a transaction be completed, Jones said it is contemplating using a “substantial portion of the net proceeds” to conduct share repurchases, although it noted that no decision has yet been reached.

Executives at Jones could not be reached for additional comment.

The U.S. wholesale jeanswear division consists of the following brands: Gloria Vanderbilt, Energie, L.E.I., Jessica Simpson, Erika, Glo, Grane, Bandolino jeans and Nine West jeans.

Investors liked the news as shares of Jones rose $1.01, or 10.4 percent, to close at $10.70 Tuesday in trading on the New York Stock Exchange. More than 7.3 million shares changed hands Tuesday, compared with a three-month average volume of 2.3 million shares traded.

For the year ended Dec. 31, jeanswear sales to external customers fell 1.3 percent to $817.9 million from $828.9 million. Total revenues for Jones for the year was $3.59 billion.

For the second quarter ended July 2, revenues for the domestic wholesale jeanswear division were essentially flat at $189.1 million versus $189.3 million in the year-ago quarter.

On a July 27 conference call with Wall Street analysts after the firm posted second-quarter results, Wesley Card, chief executive officer, said the replenishment business in jeanswear was “softer in the second quarter.” He also noted that margins were down due to cost increases.

“Jeanswear had no ability to raise prices on basic commodity items, we didn’t believe in the second quarter. So those prices are ratcheted up now as we moved into July, which will ease the pressure,” he said.

The company is expected to report third-quarter results later this month.

To Read the Full Article
SUBSCRIBE NOW

Tap into our Global Network

Of Industry Leaders and Designers

load comments
blog comments powered by Disqus