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Apr-29-2009Jones Apparel closing 225 stores(topic overview)
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NEW YORK, April 29 (Reuters) - Jones Apparel Group Inc ( JNY.N ) reported a higher-than-expected quarterly profit on Wednesday, helped by cost cuts and increased sales in its wholesale jeans business. The owner of the Jones New York, Nine West and Anne Klein brands also said it plans to close about 225 retail stores during this year and next, in a plan it expects to improve results by $3 million this year, $14 million next year and $20 million in 2011. [1] The owner of the Jones New York, Nine West and Anne Klein brands easily outperformed analysts' expectations in the first quarter thanks to cost cutting and rising demand in its wholesale jeans business.[2]
For the first quarter, the company, whose brands include Nine West, Jones New York and Anne Klein, said revenues decreased 8.6 percent to $891 million.[3] The New York-based company, whose brands include Nine West, Jones New York, Anne Klein and others, said it will close the stores in 2009 and 2010 for a total savings of $37 million over three years.[4]
The following notable events have recently occurred: -- announced the launch of Rachel Rachel Roy, a contemporary line, including sportswear, footwear and accessories, which will debut in August 2009; -- began selling New Balance for Nine West at select Nine West and New Balance stores, on-line at http://www.ninewest.com/ and internationally; -- launched an e-commerce site for our Anne Klein brand at http://www.anneklein.com/; -- introduced Nine Loves, a Nine West rewards program, at our retail stores and on http://www.ninewest.com/; -- announced an improvement strategy to return Company-owned retail stores to profitability; and -- near completion of new multi-year senior secured credit facility and debt tender offer to enhance financial flexibility. As announced on April 1, 2009, the Company is pursuing a new senior secured credit facility for up to $650 million, which will replace its existing $600 million credit facility that expires in May 2010.[5]
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, footwear under the Dockers Women brand licensed from Levi Strauss & Co., and apparel under the Rachel Roy brand licensed from Rachel Roy IP Company, 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.[5] Jones Apparel Group, which is based in Bristol, Pa., sells products on a wholesale and retail basis under brand names like Jones New York, Nine West, Anne Klein, Gloria Vanderbilt, Kasper, Bandolino, Easy Spirit, Evan-Picone and Albert Nipon, among others. Its apparel is sold in roughly three dozen retail locations, including Macy's, in Massachusetts.[6]
NEW YORK, April 29 /PRNewswire-FirstCall/ -- Jones Apparel Group, Inc. today reported results for the first quarter ended April 4, 2009.[5] Existing users, please login at the top of the page. Summary: Jones Apparel Group has posted first quarter net income of US$0.3m, down from $19.5m in the prior year period, as charges and lower sales took their toll.[7] Net income was $300,000, or nil per share, in the first quarter ended April 4, down from $19.5 million, or 23 cents per share, a year earlier. Excluding items such as an impairment charge and severance costs, the company earned 28 cents per share, easily topping analysts' average estimate of 10 cents, according to Reuters Estimates.[1] The Company reported adjusted earnings per share ("EPS") of $0.28 for the first quarter of 2009, as compared with adjusted earnings per share of $0.37 in the same period last year. These results exclude the non-cash impairment of assets related to the planned closure of certain Company-owned retail stores, the related impact of severance and other expenses related to this strategic restructuring, and certain other charges (see reconciliation of adjusted earnings to reported earnings in the accompanying schedule).[5] As reported under generally accepted accounting principles ("GAAP"), the Company reported earnings per share of $0.00 for the first quarter of 2009, as compared with earnings per share of $0.23 for the same period last year.[5]
On an operating basis, excluding a non-cash charge of $21 million related to planned store closings, the company's earnings per share would have been 28 cents, versus 37 cents a year ago, on a comparable basis.[6] Net income totaled $300,000, or break even per share, from $19.5 million, or 23 cents per share for the year earlier quarter.[3] On an adjusted basis, net income was $0.28 per share, compared to $0.37 per share in the year ago quarter.[8]
Excluding noncash impairment of assets due to store closings, severance and other expenses related to a restructuring, net income was 28 cents per share compared with 37 cents per share last year.[4] Excluding noncash impairment of assets due to store closings, severance and other expenses related to a restructuring, net income was 28 cents per share, beating analysts''' estimates of a profit of 10 cents per share, the apparel retailer said.[3]
Analysts polled by Thomson Reuters, on average, predicted a profit 10 cents per share.[4] On average, eight analysts polled by Thomson Reuters expected the company to earn $0.10 per share for the quarter.[8] The Company paid a cash dividend of $15.0 million or $0.225 per common share during the first quarter of 2009.[9] Jones did not specify how many jobs would be cut. Jones (NYSE:JNY) said its earnings were flat in the first quarter, with income of $300,000, or break-even on a share basis, compared to year-earlier income of $19.5 million, or 23 cents.[6] Revenue''fell almost 9 percent as Jones Apparel, like all clothing and accessories vendors, has seen orders shrink from retailers trying to keep inventories slim in the recession.'' Jones Apparel also plans to close about 225 stores this year and next, and cut more jobs in the first quarter. Another maker of jeans, VF Corp, posted a steeper-than-expected drop in quarterly profit and lowered its full-year profit outlook due to weak international demand.[2] Jones Apparel Group Inc said revenues declined almost 9 percent in the first quarter, dented by low consumer confidence and spending levels.[3] Commenting, Wesley R. Card, Jones Apparel Group President and Chief Executive Officer, said that given the overall economic environment, the group was '''satisfied with our first quarter results, which reflect the actions we have taken to control expenses and manage our capital.'''[3]
In addition to the retail improvement strategy, the Company implemented additional cost savings actions during the first quarter to further align the Company's cost structure with anticipated demand levels and to preserve financial flexibility. The cost savings initiatives underway, which are in addition to those implemented in 2008, largely include personnel reductions, and are expected to result in annual savings of approximately $20 million. Such actions began during the first quarter and the Company expects that full year 2009 will benefit by approximately $13 million ($9 million after tax).[5] The 2009 first quarter results include, among other items, non-cash retail store asset impairment charge of approximately $21 million ($14 million after tax) related to Company operated stores within the retail segment and a charge of $14 million ($9 million after tax) related to other cost savings initiatives.[5]
The Company anticipates expense savings and the elimination of unprofitable store locations to improve results by $3 million in 2009, $14 million in 2010 and $20 million in 2011. These actions will also reduce future capital expenditures relating to such locations.[5]
In the financial release, Jones Apparel said it would close 225 stores in 2009 and 2010 for a total saving of $37 million over three years. This follows a cost-cutting program the company announced in January.[3] John T. McClain, Jones Apparel Group Chief Financial Officer, commented, "We continue to manage costs and have identified $20 million in annual savings in 2009, which is in addition to the $33 million in annual SG&A; savings we implemented at the end of 2008 and the $17 million of cost increases we avoided by freezing salaries and wages."[5]
Analysts had expected $875 million. Like all clothing and accessories vendors, Jones Apparel has seen orders shrink from retailers trying to keep their inventories slim in the recession.[1]
Jones Apparel Group Inc. shares jumped after the company's profit excluding items exceeded analysts' estimates.[10] Clothing maker Jones Apparel Group Inc. on Wednesday reported first-quarter results much better than analysts expected but said it would close 225 stores in a cost-cutting move.[4] Jones Apparel Group, Inc. (http://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.[5]
Our own chain of retail stores was impacted by the slowing retail sales trend and promotional environment and registered a 10.6% decrease in comparable store sales during the quarter." The Company reevaluated its Company operated retail store strategy given economic conditions and trends, and has adopted a plan to right-size the retail portfolio, with the goal of enhancing segment profitability and improving return on invested capital. As part of this strategy, the Company plans to exit approximately 225 locations throughout 2009 and 2010 and will also continue to test and evaluate new concepts, such as ShoeWoo. As a matter of course, the Company continually evaluates its portfolio of stores, and now is an opportune time to take action as this plan can be adopted with the use of minimal cash expenditures.[5] One bright spot was jeans sales, which rose 3 percent. Jones, like many of its rivals, including Liz Claiborne Inc. ( LIZ - news - people ) and VF Corp. ( VFC - news - people ), has suffered as major stores have cut back on inventory amid the severe pullback in consumer spending. Lazard Capital Markets analyst Todd Slater called results a "high quality beat on margins" and reiterated his "Buy" rating on the stock.[4]
Revenue fell 8.6 percent to $891 million from $975 million, as sales declined across all segments except the wholesale jeans business.[1] Revenue fell 9 percent to $879.4 million from $963.4 million last year but that beat analyst expectations of $875.3 million.[4] Revenues for the quarter were $891 million, down 8.6% from $975 million in the comparable quarter last year.[8]
Analysts expected the company to report revenue of $875.26 million for the quarter.[8] Revenues for the first quarter of 2009 were $891 million, as compared with $975 million for the first quarter of 2008.[5] Revenue for the quarter was $294.94 million, versus the consensus of $285.7 million.[9]
Sales for the quarter ended April 4 totaled $891 million, down from $975 million a year earlier but better than the average of $875 million that analysts expected.[6] We ended the quarter with $194 million of cash, approximately the same as last year, and our revolver continues to be undrawn.[5] Cash used by operations during the quarter was $139 million, compared with cash used by operations of $66 million in the prior year.[5]
The year-over-year change in cash used is primarily due to changes in working capital flows, the receipt of a $23 million tax refund in the prior year and lower operating earnings.[5] Working capital flows were impacted by the timing of cash disbursements and less seasonal inventory decreases due to an inventory increase to support the Company's l.e.i. business. The Company continues to have no amounts drawn under its $600 million of committed revolving credit facilities.[5]
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 15, 2009 for payment on May 29, 2009. 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.jonesapparel.com/.[5] On April 28, 2009, the board of directors declared an increase in the cash dividend to $0.24 per common share payable on or about May 29, 2009 to shareholders of record as of May 15, 2009.[9] W.W. Grainger (GWW) Ups Qtr. W.W. Grainger, Inc. (NYSE: GWW ) announced today that its board of directors raised the cash dividend by 15% from $0.40 to $0.46 per common share.[9] Late last night, The Charles Schwab Corporation (Nasdaq: SCHW ) has declared a regular quarterly cash dividend of $0.06 per common share.[9]
Praxair, Inc. (NYSE: PX ) has declared a quarterly dividend of $0.40 per share, unchanged from the previous quarter.[9] Talisman Energy Inc. (NYSE: TLM ) declared a semi-annual dividend of 11 and one-quarter cents Canadian (C$0.1125) per share on the Company's common shares. This represents a 12.5% increase from the previous semi-annual dividend the Company paid on its common shares.[9]
With shares of Schwab up more than 4% to $18.30 today, the dividend currently yields 1.31%. [9] In morning trading, Jones shares rose $1.20, 14.9 percent, to $9.26.[4]
Jones will also implement more job cuts in an effort to save $20 million annually.[4] In January, the company announced a cost-cutting program to save $33 million a year, including 185 job cuts.[4]
The new three-year facility will provide the Company with significantly greater flexibility, while providing term certainty to weather the current difficult economic environment. The Company concurrently undertook a debt tender solicitation for its $250 million of notes due November 2009.[5] Approximately $240 million of notes will be tendered in connection with the offering. The Company will primarily use cash on hand to fund this debt retirement.[5]
The company also took a pre-tax charge of $14 million related to other cost-savings initiatives, it said.[6]
The decrease in revenues of 8.6% was reflective of overall economic conditions that are affecting retail sales and was realized across all of the Company's segments except wholesale jeanswear, which reported increased revenues of 3.4% compared with the prior year. [5] We remain cautious in our outlook for 2009, and as the year progresses, our focus will be on financial stability, maintaining our market share and positioning the Company for the ultimate recovery."[5]
BOK Financial Corp. (Nasdaq: BOKF ) reports Q1 EPS of $0.95, better than the analyst estimate of $0.57. [9] We anticipate that we will close on our new credit facilities and debt tender within the next week. With the closing of these transactions, we will reduce our outstanding debt by over $240 million and extend the tenor of our bank facilities to April 2012.[5]
"Given the overall economic environment, we were satisfied with our first quarter results, which reflect the actions we have taken to control expenses and manage our capital," said President and CEO Wesley R. Card, adding that promotional costs and discounting hurt performance. [6]
SOURCES
1. UPDATE 2-Jones Apparel profit tops Wall St view | Reuters
2. Shop Talk » Blog Archive » Check Out Line: Jones Apparel tries on strong profits for size | Blogs |
3. Jones Apparel Q1 revenues slide | Business News | Retail Digital
4. Jones Apparel 1Q profit beats expectations - Forbes.com
5. American Chronicle | Jones Apparel Group, Inc. Reports 2009 First Quarter Results
6. Jones Apparel closing 225 stores - Boston Business Journal:
7. US: Jones Q1 income slumps, to shut 225 shops: Apparel and textile News & Comment
8. RTTNews - Latest Earnings,Upcoming Earnings, Pos Pre Announcements, Pos Pre Announcements , Positive Surprises, Negative Surprises, Hot Stocks, Stock Split Calendar, Stock Buybacks, Dividends, Negative, Positive PreAnnouncements,Surprises .
9. StreetInsider.com
10. Article - WSJ.com
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