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Jones Apparel Group, Inc. Reports 2008 First Quarter Results
- By Maxamillion Blick
- Published 04/30/2008
- Fashion News Articles
- Unrated
Maxamillion Blick
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Jones Apparel Group, Inc. (NYSE: JNY) reported results for the first quarter ended April 5, 2008. Revenues for the first quarter of 2008 totaled $975 million versus revenues of $1,079 million for the first quarter of 2007. The year over year change includes the approximate $100 million decrease related to the planned exit from certain moderate sportswear lines, which was substantially complete by December 31, 2007.
The Company reported earnings per share of $0.23 for the quarter, as compared with earnings per share of $0.44 in the same period last year. Excluding the effects of the sale of Barneys New York, which was completed in September 2007, and its related results, the impact of severance and other expenses related to the Company's strategic restructuring activities and certain other charges, adjusted earnings per share from continuing operations for the first quarter of 2008 were $0.37, as compared with $0.46 for the same period last year (as detailed in the accompanying schedule).
Wesley R. Card, Jones Apparel Group President and Chief Executive Officer, stated, "While first quarter results were in line with our expectations, we believe there is enhanced value to be realized in our businesses as we continue to pursue our operational improvements, enhance the overall appeal of our brands and pursue varied distribution channels. Results for the quarter reflect a continued challenging economic and retail environment, as well as a tough comparable quarter, with comparable store sales in our own stores down 8.7% for the quarter compared to 2007. During the quarter, we maintained tighter inventory controls; however markdown support to our retail partners was higher than during the first quarter of 2007 and our retail operations continued to trend negatively consistent with the overall retail climate."
Cash used by continuing operating activities during the quarter was $65 million, compared with cash used by continuing operations of $178 million in the prior year. The improvement in cash flow was largely driven by improved working capital management, the positive impact of exiting certain moderate sportswear lines and the absence of the final payment associated with the exiting of the Polo Jeans Company business.
John T. McClain, Jones Apparel Group Chief Financial Officer, commented, "Our financial position remains strong. We ended the quarter with $200 million of cash and $782 million of total debt, which is $303 million less debt than the prior year period. This translates into a debt
to total capitalization ratio, net of cash, of 22.5%. We will continue to control our inventory levels and carefully review our spending throughout 2008."
Mr. McClain continued, "We have tempered our guidance for 2008, to match our retail customers' conservative plans for the back half of the year. Our updated guidance for 2008 full year adjusted earnings per share from continuing operations is a range of $1.20 to $1.35, compared with 2007 adjusted earnings per share from continuing operations of $1.26."
Mr. Card concluded, "We have taken, and continue to take, the necessary steps towards operational excellence, including streamlining our supply chain, distribution and technology infrastructure.
The challenges of the overall environment, however, require us to remain cautious in our outlook for 2008. As we continue through the year, our focus remains on regaining our position as the best supplier of branded lifestyle apparel, fashion footwear and accessories."
The Company's Board of Directors has declared a regular quarterly cash dividend of $0.14 per share to all common stockholders of record as of May 16, 2008 for payment on May 30, 2008.
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 http://www.jny.com (under Investor Relations/Conference Schedule). The call will be recorded and made available through May 8, 2008 and may be accessed by dialing 877-344-7529. Enter account number 418192. A slide presentation will accompany the prepared remarks and has been posted with the webcast on the Company's website.
Presentation of Information in the Press Release
In an effort to provide investors with additional information regarding the Company's consolidated operating results as determined by generally accepted accounting principles (GAAP), the Company has also disclosed in this press release non-GAAP financial information regarding the effect on earnings per share from certain items and charges incurred in relation to the overall strategic review of operations, inclusive of the exit from certain moderate sportswear brands announced in May 2007, and the repositioning of l.e.i. as an exclusive product for Wal-Mart Stores, Inc. announced in February 2008. The Company believes that providing this further information will allow investors to better analyze its ongoing
results. The Company has also provided a reconciliation of its GAAP results to adjusted results. The Company has not provided a reconciliation with respect to 2008 targeted earnings per share growth given that it is an estimate derived from projected results.
About Jones Apparel Group, Inc.
Jones Apparel Group, Inc. (http://www.jny.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. The Company's nationally recognized brands include Jones New York, Nine West, Anne Klein, Gloria Vanderbilt, Kasper, 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 and footwear under the Dockers Women brand licensed from Levi Strauss & Co. 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, Evan-Picone, Anne Klein New York, Nine West, Gloria Vanderbilt and l.e.i., 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.
The Company reported earnings per share of $0.23 for the quarter, as compared with earnings per share of $0.44 in the same period last year. Excluding the effects of the sale of Barneys New York, which was completed in September 2007, and its related results, the impact of severance and other expenses related to the Company's strategic restructuring activities and certain other charges, adjusted earnings per share from continuing operations for the first quarter of 2008 were $0.37, as compared with $0.46 for the same period last year (as detailed in the accompanying schedule).
Wesley R. Card, Jones Apparel Group President and Chief Executive Officer, stated, "While first quarter results were in line with our expectations, we believe there is enhanced value to be realized in our businesses as we continue to pursue our operational improvements, enhance the overall appeal of our brands and pursue varied distribution channels. Results for the quarter reflect a continued challenging economic and retail environment, as well as a tough comparable quarter, with comparable store sales in our own stores down 8.7% for the quarter compared to 2007. During the quarter, we maintained tighter inventory controls; however markdown support to our retail partners was higher than during the first quarter of 2007 and our retail operations continued to trend negatively consistent with the overall retail climate."
Cash used by continuing operating activities during the quarter was $65 million, compared with cash used by continuing operations of $178 million in the prior year. The improvement in cash flow was largely driven by improved working capital management, the positive impact of exiting certain moderate sportswear lines and the absence of the final payment associated with the exiting of the Polo Jeans Company business.
John T. McClain, Jones Apparel Group Chief Financial Officer, commented, "Our financial position remains strong. We ended the quarter with $200 million of cash and $782 million of total debt, which is $303 million less debt than the prior year period. This translates into a debt
to total capitalization ratio, net of cash, of 22.5%. We will continue to control our inventory levels and carefully review our spending throughout 2008."
Mr. McClain continued, "We have tempered our guidance for 2008, to match our retail customers' conservative plans for the back half of the year. Our updated guidance for 2008 full year adjusted earnings per share from continuing operations is a range of $1.20 to $1.35, compared with 2007 adjusted earnings per share from continuing operations of $1.26."
Mr. Card concluded, "We have taken, and continue to take, the necessary steps towards operational excellence, including streamlining our supply chain, distribution and technology infrastructure.
The Company's Board of Directors has declared a regular quarterly cash dividend of $0.14 per share to all common stockholders of record as of May 16, 2008 for payment on May 30, 2008.
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 http://www.jny.com (under Investor Relations/Conference Schedule). The call will be recorded and made available through May 8, 2008 and may be accessed by dialing 877-344-7529. Enter account number 418192. A slide presentation will accompany the prepared remarks and has been posted with the webcast on the Company's website.
Presentation of Information in the Press Release
In an effort to provide investors with additional information regarding the Company's consolidated operating results as determined by generally accepted accounting principles (GAAP), the Company has also disclosed in this press release non-GAAP financial information regarding the effect on earnings per share from certain items and charges incurred in relation to the overall strategic review of operations, inclusive of the exit from certain moderate sportswear brands announced in May 2007, and the repositioning of l.e.i. as an exclusive product for Wal-Mart Stores, Inc. announced in February 2008. The Company believes that providing this further information will allow investors to better analyze its ongoing
results. The Company has also provided a reconciliation of its GAAP results to adjusted results. The Company has not provided a reconciliation with respect to 2008 targeted earnings per share growth given that it is an estimate derived from projected results.
About Jones Apparel Group, Inc.
Jones Apparel Group, Inc. (http://www.jny.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. The Company's nationally recognized brands include Jones New York, Nine West, Anne Klein, Gloria Vanderbilt, Kasper, 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 and footwear under the Dockers Women brand licensed from Levi Strauss & Co. 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, Evan-Picone, Anne Klein New York, Nine West, Gloria Vanderbilt and l.e.i., 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.