JONES APPAREL HIKES QUARTERLY PROFIT GUIDANCE
Byline: Vicki M. Young
NEW YORK — Jones Apparel Group Inc. Wednesday said it expects to exceed previous first-quarter earnings per share guidance of 62 cents to 64 cents, but did not elaborate by how much.
The company, however, did quantify after-tax charges of 14 cents per share for contract obligations arising under certain employment contracts, including those for former president Jackwyn Nemerov and 10 cents per share due to a change in accounting for the non-cash write-down of trademarks.
Jones also announced that Irwin Samelman, vice chairman and director, will retire on April 30.
Research report updates by Wall Street analysts covering the firm indicated that the improvement in EPS is likely driven by better than expected results in Nine West footwear, the Lauren by Ralph Lauren line and Polo Jeans. Those gains are offsetting trouble spots in the weak career business category and sales in the department store channel.
According to the apparel firm, the contractual obligations under employment contracts are primarily for Nemerov and Samelman. Both have relinquished their seats on the board.
The charges under these contracts, to be recorded in selling, general and administrative expenses, are pre-tax amounts totaling $18.7 million for salary and bonus obligations and $10.8 million for non-cash stock option compensation expense from the vesting of outstanding stock options and restricted stock.
Jones said that the pre-tax amount also includes $2 million in connection with certain obligations under the employment agreement that the company entered into with Peter Boneparth when it acquired McNaughton Apparel Group Inc. in 2001. Those obligations were satisfied in March 2002 when Boneparth was named president and designated chief executive officer starting on May 22, 2002.
Jones said nothing Wednesday in connection with its $300,000 settlement of Federal Trade Commission charges a day earlier. The sanction was for providing incorrect cleaning directions on some of its garments.
However, an alert issued Tuesday by Todd Slater, analyst at Lazard Freres, indicated the FTC “event was accounted for in the [fourth quarter of 2001 and] there will be no negative financial impact on future quarters.”
The firm said it will announce first-quarter earnings on April 30.
In a statement, Sidney Kimmel, chairman, thanked Samelman “for his major contribution to the growth and development of the Company over his 11 year tenure.”
“We certainly will miss him and wish him the best for the future,” Kimmel said.
In other news, Kenneth Cole Productions Inc. expects to spend $10 million to open or expand eight to 10 stores this year, a drop of 5.6 percent from last year, according to a Securities and Exchange commission filing.
The firm also plans to increase its retail square footage by 15 percent. Plans for the year include the opening or expansion of three to four retail sites and six outlet locations.