JONES APPAREL CREDITS CASUAL FOR ’94 GAINS
Byline: Thomas J. Ryan
NEW YORK — Jones Apparel Group is swinging to casual dressing.
The firm, which built its business on its Jones New York career wear, continues to score in that area, but in 1994 the firm’s casual wear set the pace, helping to fuel hefty gains in both sales and profits.
In the fourth quarter ended Dec. 31, the company reported profits climbed 35.2 percent on a 30.7 percent jump in sales.
Earnings rose to $9.98 million, or 38 cents a share, from $7.4 million, or 28 cents, a year earlier. Earnings were in line with Wall Street estimates.
Sales totaled $142.1 million, up from $108.7 million. Casual sportswear sales more than doubled in the quarter, while the core career sportswear line grew 24 percent. Sales in the suits and dress division were flat.
In the year, earnings rose 13.6 percent to $54.9 million, or $2.08 a share, from $48.4 million, or $1.85, in 1993 before a $1.4 million accounting credit. After the credit, 1993’s net was $49.7 million, or $1.90 a share.
Sales in 1994 moved ahead 17 percent to $633.3 million from $541.2 million. Sales of career sportswear rose 13 percent to $410 million, casual sportswear grew 48 percent to $108 million and suits and dresses were up 11 percent to $116 million.
Sidney Kimmel, chairman, said,”Our business performed well in the second half of 1994 against the backdrop of the highly promotional retail environment that prevailed, especially toward the end of the year.”
Looking to 1995, Kimmel said the company will “aggressively pursue” market share gains in all product categories. Kimmel pointed out that Jones’ balance sheet “is sound,” with $247 million in shareholders’ equity, $21 million in cash and no short-term borrowings.
“Our strong financial position allows us many options in pursuing further growth,” Kimmel said.
In a conference call with analysts, Jones said there is explosive sell-through at retail in casualwear, and said 1995 sales would jump 80 percent to 100 percent.
Jones termed career wear’s performance “better than good” in the quarter, aided by improved sell-throughs. Eva-Pi cone, acquired in November 1993, was doing well and is getting strong customer recognition, Jones told analysts. Jones expects flat to slightly higher sales of career wear in 1995.
Career brands include Jones New York, Rena Rowan for Saville and Evan-Picone; its casualwear includes Jones New York Sport and Rena Rowan for Saville Sport. The firm also produces Jones*Wear for J.C. Penney Co., a line that includes career wear as well as casualwear.
The suit area also had improved sell-throughs in the quarter, and Jones noted Christian Dior suits were the best performer in bridge.
The only disappointing area was the Jones New York dress division, which the company said was hurt by a combination of internal product and pricing problems and an overall weak dress market. For 1995, Jones told analysts it planned to produce fewer dresses to avoid the markdowns, although it has launched an Evan-Picone dress line for spring retailing. Evan-Picone is a better-price line; prices on Jones New York dresses run from better to bridge.
At outlet stores, sales reached $78 million in 1994, versus $55 million. Jones projected sales of $100 million for 1995. There were 140 outlet stores open at yearend versus 103 at 1993’s close. Jones will add 40 to 50 stores this year, half of them Evan-Picone.
Shares of Jones Apparel on the New York Stock Exchange Tuesday fell 1 to 24 1/4, but analysts were upbeat about the company’s performance.
“I think it was impressive to see their numbers in the kind of environment we’re in,” said Jennifer Black Groves at Black & Co., based in Portland. “The sell-throughs have been great.”
Laurence C. Leeds Jr., managing director at Buckingham Research, said that despite the push into the lower-margin casual business, the company still expected net margins to remain flat this year.
“The casual area is very profitable, even though the margins are smaller,” he said.
Wall Street’s earnings estimates for 1995 range from $2.35 to $2.45 a share.
Jones announced that Richard Korman has joined the company as vice president of merchandising of Jones New York sportswear.
— Fairchild News Service