MCNAUGHTON APPAREL REBOUNDS IN QUARTER

Byline: Thomas J. Ryan

NEW YORK — Riding vibrant demand for its brands and a successful rollout at Kohl’s Corp., McNaughton Apparel Group reported earnings of $2.1 million, or 29 cents a share, in the first quarter ended Feb. 5, rebounding from a $2 million loss a year ago.
Sales jumped 31.7 percent to $87.7 million from $66.6 million.
Miss Erika, a moderately priced casual separates line, paced results, adding about $9 million in sales, or more than 50 percent above those of the prior year, said Amanda Bokman, vice president and chief financial officer, on a conference call. Jeri-Jo’s sales gained $7 million, or more than 30 percent, and Norton McNaughton added $6 million, or about 20 percent, she said.
Gross margins improved to 27.2 percent of sales from 22.8 percent, largely due to “very significant increase” in margins in Norton and Jeri-Jo as a result of fewer closeouts and higher initial markups, Bokman said.
“Our backlog at this time compared with last year is up over 50 percent and it’s up very significantly at all three divisions,” she said.
Bokman added that Norton benefited from improved sourcing, while Jeri-Jo was aided by “very strong demand for their product at retail” and reduced competition in juniors in the mass market, she said.
Peter Boneparth, chief executive, said of Jeri-Jo, “Basically, you’re seeing a smaller number of players being able to compete at the price points in our distribution channel with the type of product we’re able to offer. We are in the middle of a strong spring selling season and we are also seeing orders for fall far ahead of what they were at this time last year.” The division includes the Energie, Currants and Jamie Scott brands.
Erika’s spring sell-throughs “have accelerated dramatically in the last month and reorders are very strong. Bookings for fall are coming in very nicely,” he said. Erika is benefiting from retailers’ penchant to deal with fewer larger resources, and fall orders appear to benefit from a greater emphasis on “wear-now” merchandise for August, September and October shipments, he added.
Norton’s spring sell-throughs are “very strong, and we’re very happy with the forward order book,” Boneparth said. Norton’s growth is being supported by growth at existing customers, as well as “terrific response” at Kohl’s.
The expansion to Kohl’s is boosting all three McNaughton divisions, and the chain should represent 10 percent of sales this year and become a $100 million business in the next few years, Boneparth said. Kohl’s shipments began in 1998.
The Norton line is also seeing a good response to a limited spring print campaign in Rebook, Mode, Martha Stewart Living and InStyle, representing the brand’s first ad campaign. The firm is “in the early stages of planning a branding campaign” for Miss Erika, Boneparth added.

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