Wes Card

Shares of Jones Apparel Group rose 5.5 percent on Wednesday despite first-quarter profits that were down because the company saw improvement in the spring selling season.

Shares of Jones Apparel Group rose 5.5 percent on Wednesday despite first-quarter profits that were down because the company saw improvement in the spring selling season.

“I think what was encouraging, when the weather warmed in the first part of April, was that we saw a definite pickup in our retail sales,” said Wes Card, president and chief executive officer. “[We had] lots of bright colors and the comps in our stores were in the black. That’s very encouraging and we saw some pent-up demand.”

Card said if the trend continues, it could “bode well” for a pickup in the back half of the year, particularly in the fourth quarter. This could enable the company to meet its own guidance at the top half of its range.

Shares of Jones closed at $15.83 in trading Wednesday on the New York Stock Exchange.

The company updated its guidance to reflect retailers’ overall conservative plans for the back half of the year. For the full-year 2008, Jones is expecting adjusted earnings per share from continuing operations at between $1.20 and $1.35, versus 2007 adjusted EPS of $1.26 from continuing operations.

For the first quarter ended April 5, income fell by 59.2 percent to $19.5 million, or 23 cents a diluted share, from $47.8 million, or 44 cents, in the same year-ago quarter. Excluding the effects of the sale of Barneys New York and the impact of severance and other costs related to the company’s strategic initiatives, adjusted EPS from continuing operations were 37 cents, versus 46 cents last year. Total revenues were down 9.6 percent to $975.4 million from $1.08 billion. Revenues included a 9.5 percent decrease in sales to $963.4 million from $1.06 billion last year. Same-store sales at the company’s own stores were down 8.7 percent for the quarter.

The ceo also said that so far, Jones is “very encouraged” by spring and beyond. “The orders have held up well. Retailers are ordering conservatively and more so for fall. Some newness in the assortments will help with less promotions at retail,” Card said.

He also noted that the scenario the company is hoping for, and for which it is planning, is one where there is better inventory control and fewer promotions at retail, in part so there’s a corresponding decrease in the need for markdown support to Jones’ retail clients. Due to the slowdown in the fourth and first quarters, there was an incremental increase in the amount of markdown support that was reflected in the company’s first-quarter margins.

This story first appeared in the May 1, 2008 issue of WWD. Subscribe Today.

According to chief financial officer John McClain, the company ended the quarter with $200 million in cash and $782 million of total debt, or $303 million less debt than a year ago. While the sale of Barneys helped to pay down some of the firm’s short-term debt, the company also has been working on tighter management of its inventories.

In addition to the operations side, Card has worked on bolstering the morale of the company’s employees.

“I’ve been doing regular town hall meetings. The strategy we’re working on is to dramatically step up our communication. In August, we will have a new Internet site for employees where they can tune into the news events that affect the company,” Card said.

In addition to an executive corner chat on the site, the company will highlight employee news, such as the recognition program that was rolled out on Tuesday. The program identifies top-performing employees, and includes a cash bonus for the associates cited.

Jones also is getting greener, working on initiatives such as recycling and using energy-efficient lightbulbs. It is undertaking a broader study on what the company can do, and asking employees for suggestions.

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