CASUAL PACES GAINS AT JONES

Byline: Thomas J. Ryan

NEW YORK — Although sales of career wear labels at Jones Apparel Group raced ahead last year with the fall launch of the licensed Lauren Ralph Lauren line, the firm’s group of casual labels advanced even faster.
According to the firm’s 10K filed with the Securities and Exchange Commission covering 1996, casual sportswear sales surged 43.1 percent to $302 million from $211 million. This followed a jump of 97 percent in 1995. Under the casual umbrella last year, the firm launched Jones Jeans, a denim line, and Jones Studio, a casual separates line. Other casual labels include Jones & Co. and Jones New York Country.
Career sportswear grew 31.4 percent in 1996 to $577 million from $439 million, a substantial improvement from a 7.1 percent gain in 1995. The biggest launch for Jones was the Lauren Ralph Lauren collection, which started shipping in July 1996. Jones plans to introduce a petite line, as well as coats and suits under its Lauren license for fall 1997.
While it contains casual looks, the Lauren collection is considered part of Jones Apparel’s better-price career group. Other career labels include Jones New York, Rena Rowan for Saville, Evan-Picone and Jones*Wear.
Looking forward, Jones Apparel said career wear sales this year will be aided by the full rollout of the Lauren label. It did not break out sales for the line, but a Wall Street estimate has put the line’s contribution to Jones’s sales in the most recent fourth quarter at $24 million and forecast sales of at least $150 million for all of 1997. Other estimates have put 1997 sales as high as $170 million.
The 10K notes that under the five-year license and design service agreements with Polo Ralph Lauren for the Lauren line, Jones pays a percentage of net sales, with minimum payments of $7 million, each due 2000 and 2001.
In Jones’s other wholesale apparel business, primarily suits and dresses, sales gained 12.7 percent to $142 million from $126 million, versus a gain of 8.6 percent in 1995. In 1996, the firm launched Evan-Picone evening dresses.
In its own retail businesses, Jones reached a total of 196 factory outlet stores last year, up from 175 a year ago. It also operates four full-price stores, as well as coffee bars near four of its outlets. Retail sales grew 26.8 percent last year to $129.8 million from $102.3 million, while square footage expanded to 557,100 from 478,978.
As reported, Jones’s overall profit in 1996 jumped 27.4 percent to $80.9 million, or $1.50 a share. Sales topped the $1 billion mark for the first time, at $1.02 billion, up 31.5 percent from a year ago.
Jones said that sales generally are benefiting from a trend among major retailers to concentrate women’s apparel buying among a narrowing group of vendors. It also said it is being helped by leveraging the strength of its brands both in the number of locations and in selling space, as well as the introduction of new product extensions and new labels.
In addition to the growth expected in career sportswear, the 10K said, the casual lines “also present growth opportunities, although not necessarily at the rates historically achieved.”
It also said that increases in its suit and dress businesses — principally the Jones New York, Evan-Picone and Saville labels — will be offset by the phaseout of the licensed Christian Dior label.
The 10K also revealed:
Jones gross margins last year improved to 29.8 percent of sales from 29.6 percent as a result of higher margins from major lines as well as the launch of Lauren Ralph Lauren. However, selling, general and administrative expenses increased to 18.3 percent from 17.9 percent, primarily because of advertising, royalties and associated operating costs for the Lauren Ralph Lauren line.
During 1996, about 35 percent of Jones products were manufactured in the U.S. and Mexico, with the remaining 65 percent primarily made in Asia.
Jones received $7.7 million from licensing out the Jones New York name, and $5.6 million on its Evan-Picone name. At yearend, there were 35 licensing agreements for Jones New York and 14 for Evan-Picone.
Department stores account for about two-thirds of Jones Apparel’s sales. Federated Department Stores and May Department Stores each accounted for about 20 percent of sales. Its leading customers are Lord & Taylor, Hecht’s, Foley’s, Macy’s, Lazarus, Bloomingdale’s, Dillard’s, Dayton Hudson and Nordstrom.
At Dec. 31, the company had approximately 2,945 full-time employees, with only 20 in executive or senior management.
At Dec. 31, unfilled customer orders were $419 million versus $301 million a year ago.

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