NEW YORK--Citing strength in casual sportswear, Jones Apparel Group reported third-quarter earnings rose 5 percent to $20.7 million, or 79 cents a share, from $19.6 million, or 75 cents, a year earlier.
In the quarter ended Oct. 2, sales gained 17 percent to $193.7 million from $165.7 million.
However, operating margins declined to 17.2 percent of sales from 19.5 percent. The company did not return phone calls seeking an explanation.
In a statement, Sidney Kimmel, chairman, said casual sportswear sales gained 72 percent and career sportswear was up 9 percent, aided by strength in the firm's newest career label, Evan-Picone, acquired last year, and the Rena Rowan for Saville label. Sales in other areas, including dresses and suits, rose 11 percent, with healthy growth in Christian Dior Suit and Jones New York Suit. "Overall, company sell-throughs during this period were exceptionally strong, commencing in late August and continuing through the last several
weeks," he said.
Analysts liked the results.
Laurence C. Leeds, managing director at Buckingham Research, said, "Their business is good, and we're expecting a very strong fourth quarter." He said there should be a 100 percent increase in shipments of casual sportswear for the fourth quarter, and the category should grow 50 to 75 percent next year. Overall, said Leeds, Jones's merchandise is "retailing very well in a difficult climate."
Leeds noted that the quarter's earnings came in at 1 cent above the Wall Street consensus of 78 cents a share. On the New York Stock Exchange, Jones's stock closed Tuesday at 26 5/8, up 1/4, and continued to reflect recovery from the jolt it took early in September, when its was announced that Andrew Grossman had resigned as Jones president to join Bernard Chaus as chief executive officer. The day following that announcement Jones's stock dropped 2 points to 23 1/8.
Todd Slater, UBS Securities, agreed that Jones had a very good quarter. "They're taking market share in casualwear," he said, adding careerwear is performing solidly, too.
Slater estimates Jones will sell about $100 million in casualwear this year, out of total projected sales of $638 million. "Next year, casual sales could double to $200 million," he said. In the nine months, earnings were up 10 percent to $44.9 million, or $1.69, from $41 million before a special item. A $1.4 million accounting gain boosted year-ago net to $42.4 million, or $1.62. Sales rose 13.6 percent to $491.1 million from $432.4 million.
--Fairchild News Service

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