Jones Apparel Group Inc. Reports 2010 First Quarter Results
New York-based Jones Apparel Group Inc. reported results for the first quarter ended April 3, 2010. Revenues for the first quarter of 2010 exceeded expectations and were $887 million, as compared with $891 million for the first quarter of 2009. Gross profit margin increased 390 basis points to 36.8 percent, reflecting continued careful inventory management.
The company reported adjusted earnings per share (EPS) of $0.47 for the first quarter of 2010, as compared with adjusted earnings per share of $0.28 in the same period last year. Results for both periods exclude the impact of severance and other expenses related to the planned closure of certain Company-operated retail stores, and certain other charges (see reconciliation of adjusted earnings to reported earnings in the accompanying schedule).
As reported under generally accepted accounting principles (GAAP), the company reported net income of $0.45 per share for the first quarter of 2010, as compared with net income of $0.00 per share for the same period last year. The 2010 first quarter results include, among other items, costs and charges of approximately $3 million ($2 million after tax) related to the acquisition of Robert Rodriguez and other restructuring and strategic review costs. In the prior year quarter, results included, among other items, non-cash retail store asset impairment charges of approximately $21 million ($14 million after tax) related to the closure of company-operated stores and charges of $14 million ($9 million after tax) related to other cost savings initiatives.
Wesley R. Card, Jones Apparel Group chief executive officer, stated: "We are very pleased with the results we achieved in the first quarter and the positioning and performance of our core brands. Sales for the first quarter exceeded expectations and operating margins increased in all segments compared with the prior year's quarter. Jeanswear margins were exceptionally strong, which is reflective of the group's execution and aggressive inventory management. Better Apparel and Footwear and Accessories were also strong performers, driven by higher gross margins. Our vertical retail operations results are much improved. We closed 63 retail locations this quarter and ended the quarter with 877 locations and are on track to close an additional 110 unprofitable locations by the end of 2010."
The following notable events have recently occurred:
- completed the acquisition of the Robert Rodriguez Collection, a designer, marketer and wholesaler of women's contemporary eveningwear and sportswear
- launched an e-commerce site for ShoeWoo, our multi-brand retail shoe concept at www.shoewoo.com; and
- renewed license agreement with Luxottica for Anne Klein New York eyewear.
Cash used by operations during the quarter was $86 million, compared with cash used by operations of $139 million in the prior year. The year-over-year improvement in cash used by operations of $53 million is primarily due to higher operating earnings and slightly lower working capital requirements. The company continues to have no amounts drawn under its $650 million of committed revolving credit facilities.
John T. McClain, Jones Apparel Group chief financial officer, commented: "Our financial position remains strong. We ended the quarter with $222 million of cash, $28 million more than last year, and our revolver continues to be undrawn. Throughout the remainder of 2010, we will maintain our management of inventories and expenses to conserve cash and improve margins."
Mr. Card concluded: "On a macroeconomic level, we are encouraged by rising consumer confidence and positive retail trends. While we believe these trends should continue, the economic environment remains unclear and consumer spending is unpredictable. We will continue to position our core brands for growth and fill the white space in our portfolio with selected acquisitions and growth initiatives."
The company's board of directors has declared a regular quarterly cash dividend of $0.05 per share to all common stockholders of record as of May 14, 2010 for payment on May 28, 2010.
The Company will host a conference call with management to discuss these results at 8:30 a.m. eastern time today, which is accessible by dialing 412-858-4600 or through a web cast at www.jonesapparel.com. The call will be recorded and made available through May 7, 2010 and may be accessed by dialing 877-344-7529. Enter account number 439579. A slide presentation will accompany the prepared remarks and has been posted on the investor relations section of the Company's website.
About Jones Apparel Group Inc.
Jones Apparel Group, Inc. (www.jonesapparel.com) is a leading designer, marketer and wholesaler of branded apparel, footwear and accessories. The Company also markets directly to consumers through its chain of specialty retail and value-based stores and through its e-commerce web sites. The Company's nationally recognized brands include Jones New York, Nine West, Anne Klein, Gloria Vanderbilt, Kasper, Robert Rodriguez, Bandolino, Easy Spirit, Evan-Picone, l.e.i., Energie, Enzo Angiolini, Joan & David, Mootsies Tootsies, Sam & Libby, Napier, Judith Jack, Albert Nipon and Le Suit. The Company also markets costume jewelry under the Givenchy brand licensed from Givenchy Corporation, women's footwear under the Dockers and Dockers Women brands and infants', toddlers' and boys' footwear (excluding girls' footwear) under the Dockers and Dockers Premium brands, licensed from Levi Strauss & Co., apparel and accessories under the Rachel Roy brand licensed from Rachel Roy IP Company, LLC, and Jessica Simpson jeanswear licensed from VCJS LLC. Each brand is differentiated by its own distinctive styling, pricing strategy, distribution channel and target consumer. The Company contracts for the manufacture of its products through a worldwide network of quality manufacturers. The Company has capitalized on its nationally known brand names by entering into various licenses for several of its trademarks, including Jones New York, Anne Klein New York, Nine West, Gloria Vanderbilt, l.e.i. and Evan-Picone, with select manufacturers of women's and men's products which the Company does not manufacture. For more than 30 years, the Company has built a reputation for excellence in product quality and value, and in operational execution.