QUARTER NET GAINS 29.8% AT JONES
Byline: Thomas J. Ryan
NEW YORK — With older and newer businesses kicking in, Jones Apparel Group’s first-quarter earnings jumped 29.8 percent, to $70.6 million, or 58 cents a share, from $54.4 million, or 51 cents, a year ago.
Results exceeded Wall Street’s consensus target of 55 cents.
Sales jumped 87.4 percent to $1.08 billion from $574.8 million, reflecting the June 1999 acquisition of Nine West Group. But Jones’s core business contributed, with wholesale apparel sales increasing 9.8 percent to $595.5 million.
Sidney Kimmel, chairman, said in a statement that Jones saw “solid retail selling performance across all our major businesses,” particularly Lauren by Ralph Lauren, Polo Jeans Co., Jones New York Collection and Nine West footwear and accessories. Operating results in retail, primarily stores picked up from Nine West, “were significantly improved” due to restructuring efforts.
“We continue to leverage our strength across apparel, footwear and accessories to become the dominant provider of lifestyle dressing across multiple channels, as well as to multiple markets,” said Kimmel. “We are optimistic that the scheduled third-quarter launches of Nine West women’s apparel and Jones New York accessories, which represent our first significant cross-selling initiatives within our core competencies, will be well received by the market.”
“It was just a solid quarter,” said Lee Backus, an analyst at Buckingham Research. “They are seeing some good retail sell-throughs in the Nine West brands and better sell-throughs in Jones career. And all the various licensed Ralph Lauren lines were strong.”
Jennifer Black, at Black & Co., was particularly impressed at the improvement and prospects for Nine West.
“People were very skeptical about the Nine West acquisition, and they’ve done an incredible job,” said Black. She noted that Jones had secured a spot as the dominant footwear and accessories department store resource at a time when those categories are sizzling.
“People are dressing up and color is selling, so they’re totally going to reap the rewards,” Black said.
On a conference call, Jackwyn Nemerov, president of Jones Apparel Group, said the penchant for dressing up had “renewed interest” in the Jones and Rena Rowan career lines and additions to its basic replenishment program led to “excellent sell-throughs.” Jones dresses saw “excellent selling” as a result of broader pricing and offerings, and Nemerov cited “significant opportunity” to gain share, since the dress category is not dominated by major brands. Jones New York Sport was hampered by the flood of new entries in casual, but late spring sell-throughs have been better.
Lauren by Ralph Lauren “continues to be a stellar performer at department stores,” with extensions into denim, petite and large sizes doing well, she said.
While Jones is “very pleased” with Ralph by Ralph Lauren, stronger results were seen at department stores appealing to youth than those catering more to baby boomers. Nemerov noted that the junior line, launched for fall 1999, did more than $100 million in its first year and could reach $300 million. Sales should be helped by more direct-to-consumer marketing and Cosmair’s $20 million September launch of the Ralph fragrance.
Polo Jeans “is one of the strongest performers in the status denim department” led by its R1 men’s line and Saturday women’s line, and hasn’t been hurt by markdowns of other status denim lines, such as Tommy Hilfiger. A higher denim component is planned this fall, and a Sprite campaign featuring Polo Jeans on cans and vending machines that runs this summer in the U.S. should hike brand exposure, Nemerov said.
Evan-Picone, repositioned from better to moderate, is selling well at May and J.C. Penney, and should reach 750 U.S. doors this fall from 600, Nemerov said. Picone dresses were launched in 300 doors this spring and have “met with strong reception,” as have new launches of accessories and footwear.
Wholesale footwear and accessories improved due to a 30 percent reduction in stockkeeping units to focus on top styles, and a flurry of trends. “The consumer is dressing up and fashion is selling,” said Nemerov. “Black is no longer the answer to everything.”
Wholesale footwear and accessories grew 2 percent to $246.2 million on a comparative basis. Retail revenues dipped about 1 percent to $236 million on a comparative basis due to the closure of about 300 stores in the last year. Jones now has 883 units in the U.S. and 386 internationally.