LAUREN LINE SWEETENS JONES RESULTS IN PERIOD

Byline: Diane E. Picard

NEW YORK — Boosted by powerful results at Lauren Ralph Lauren, now expected to hit more than $200 million in sales this year, Jones Apparel Group’s first-quarter earnings jumped 45.2 percent on a 22.1 percent increase in volume.
Earnings in the three months ended March 30 were $29.5 million, or 55 cents a share, well ahead of Wall Street estimates of 46 cents.
Shares of Jones Apparel rose 2 1/4 to 39 3/4 on the New York Stock Exchange Wednesday.
In the 1996 quarter, Jones Apparel earned $20.3 million, or 38 cents.
Sales moved up to $318 million from $260.3 million.
In a conference call, analysts were told that sales of career apparel were up 36 percent to $202 million; casual sales rose 4 percent to $78 million, and dresses and suits were up 4 percent to $38 million.
The quarter’s results “are reflective of a strong contribution from the Lauren Ralph Lauren sportswear collection, as well as continued strength across all our business,” said Sidney Kimmel, chairman, in a statement.
“Based on the continued success of the Lauren Ralph Lauren product, we now anticipate exceeding $200 million in that business’ net sales for 1997,” he said.
Earlier forecasts from analysts had projected 1997 sales of the licensed line at as high as $170 million.
The Lauren collection, launched at retail in August 1996, is expected to add coats and suits and petite shops for fall 1997, Kimmel said.
“The spring 1997 season registered extremely healthy retail performance across all of our career sportswear resources,” Kimmel added. “Our casual sportswear and dress business returned a solid performance, as well.”
Allison Malkin, apparel analyst at Dillon Read & Co., estimated the new Lauren line contributed $52 million in sales in the quarter.
She estimated the Jones New York Career line posted a sales gain of about 10 to 12 percent, while Rena Rowan for Saville sales were flat, but in line with her expectations. Looking ahead, Malkin expects Jones will earn 31 cents a share, compared with 26 cents a year ago, and raised her full-year estimate by 8 cents to $1.95. In 1996, Jones earned $1.50.
Malkin noted the Lauren line, together with the company’s broad base and wide customer appeal, is helping fuel Jones’ success.
“There aren’t many manufacturers that are offering this type of merchandise at these price points,” Malkin said.
Operating margins are starting to improve, Malkin said, adding that for the previous five years they had been declining.
Gross margins improved to 32.4 percent from 28 percent last year.
Selling, general and administrative expenses rose to 18.6 percent of sales, but includes $1.5 million in added expenses to advertise and expand Lauren, Malkin said.
Open-order backlog was 32 percent higher than a year ago, Kimmel noted, adding that the company is showing excellent customer response to the fall collections, especially Jones New York, Evan-Picone and Rena Rowan for Saville, in addition to the Lauren line.

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