NEW YORK — Jones Apparel Group Inc. on Thursday posted third-quarter earnings and revenue increases, and upped its full-year guidance for fiscal 2002.
For the three months ended Oct. 5, the company reported a 144 percent jump in income to $129.8 billion, or 95 cents a diluted share, from $53.1 billion, or 52 cents, in the same year-ago period.
Excluding charges in both periods, earnings per share were $1.01 versus 96 cents last year. The latest quarter charge was $8.6 million for the adjustment in fair market value of inventory from the purchase of LEI jeans. Last year’s charges include $54 million in write-downs in connection with the value of goods disposed of through the off-price channels. Earnings per share excluding special items exceeded Wall Street’s mean consensus estimate for the quarter of 96 cents by 5 cents.
Total revenues were up 2.8 percent to $1.28 billion from $1.24 billion last year. Included in the revenue tally was a 2.9 percent increase in sales to $1.27 billion from $1.23 billion and a 15.5 percent drop in licensing income to $6.5 million from $7.7 million.
Due in part to planned decreases, wholesale sales for the quarter in the better apparel category were down 10 percent to $508.2 million from $564.6 million, while the moderate apparel segment, boosted in part by acquisitions in the last year, jumped 44.8 percent to $341.8 million from $236.1 million. Wholesale footwear and accessories dipped 3.1 percent to $255.4 million from $263.6 million. Retail sales declined by 3 percent to $165.6 million.
Based on third-quarter results, the company increased its EPS guidance for fiscal 2002 to between $2.79 and $2.81 a share, up from the $2.72 to $2.75 projected in July.
The company said it expects fourth quarter EPS of between 48 cents and 50 cents, and said it remains "comfortable" with fiscal 2003 EPS guidance of $3.05.
Investors reveled in the results and forecasts, sending shares of Jones up $1.63, or 4.9 percent, to close at $34.64 in New York Stock Exchange trading Thursday.
Peter Boneparth, president and chief executive officer, said in a statement, "Our strong performance for the quarter, against the background of an uncertain economic climate and its impact on retail sales, demonstrates the success of our prudent planning and the continued effective execution of our multibrand, multichannel strategies."He told analysts during a conference call Thursday that sales in the better category showed improvement in the last couple of weeks as weather conditions changed, boosting sales of layering pieces and knits, for example.
"The jacket business is not dead," he said of the moderate category, noting that the company is seeing a consistency in the career business, although not yet at a level that qualified as a resurgence. The ceo said Jones has been aggressive about taking markdowns so that retailers’ shelves are cleared for spring deliveries.
The Lauren by Ralph Lauren line, a rapidly maturing business, managed to be up in the single digits from last year. "The challenge is how do you keep growing it," Boneparth noted. The Ralph line is smaller and the challenge there is one of achieving critical mass, Boneparth said.
The men’s wear portion of Polo Jeans has been challenging, he noted, but there’s been a "nice uptick in the last couple of weeks." The women’s side of Polo Jeans fared better and sales are expected to be good for the fourth quarter.
Boneparth noted that Jones is evaluating whether the mature Rena Rowan business has enough brand recognition to warrant expansion. The problem, he said, is that Rena Rowan may be a label and not a brand.
The impact of the recent acquisitions of Gloria Vanderbilt and LEI has exceeded expectations, the ceo said: "In an environment where the junior business is extremely difficult, LEI is the backbone of the junior business. In bad times, the cream really does rise to the top."
Gloria Vanderbilt emerged as the company’s best performing single division in terms of actual sell-throughs. Denim has trended well, along with corduroy and velvet. The company is planning to launch a Gloria Vanderbilt sportswear business focusing on the career bottoms business. Jones will preview the line in the next few weeks, with the line in stores in January.
Overseas, Jones will continue to work with its current agent base in Hong Kong, but over time expects to do more work with an expanded office there.
Jones generated $370 million of cash flow from operations during the first nine months of the year."The environment is throwing curves, [but] we are in a good position going forward," Boneparth said.
For the nine months, income was up 30.3 percent to $266.9 million, or $1.97 cents a diluted share, from $204.9 million, or $1.87, in the comparable year-ago period. Total revenues were up 5.4 percent to $3.38 billion from $3.2 billion.
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