New York—While Jones Group Inc. reported Wednesday that its sales increased, the owner of Nine West, Anne Klein and Stuart Weitzman brands posted a nearly 80% plunge in its second quarter profit related to recent acquisitions.
For the quarter ended July 2, the company reported net income of $5.2 million, or 6 cents a share, compared with $25.7 million, or 30 cents a share last year. Jones Group said its results reflected a nearly $23 million charge relating to its acquisition of Stuart Weitzman and another $12 million in lease costs among others.
Expands Internationally with Kurt Geiger Purchase
Total sales rose 3% to $888 million, up from $860 million last year. Gross margin edged down to 36.4% from 36.9% as overhead expenses rose 6.2%. Jeanswear sales fell 17%. Domestic retail rose 15% while sales at wholesale footwear and accessories fell 5.3%.
Excluding the Stuart Weitzman acquisition costs and other expenses, earnings would have been 33 cents a share. Analysts’ average estimate expected earnings of 27 cents a share on sales of $894.8 million.
Noting that the company is focusing in improving profit margins and keeping a tight reign on inventory, expenses, Wesley Card, ceo, said, “Since we completed the acquisition of Stuart Weitzman a year ago, the brand has performed exceptionally well and experienced strong growth, both domestically and internationally. We also continue to optimize our portfolios’ existing and new brands, and with the acquisition of Kurt Geiger, we are further expanding our reach into the luxury sector and internationally.”
Last month, Jones acquired United Kingdom-based luxury shoe retailer Kurt Geiger for about $350 million in cash and debt, adding to its international presence. It also signed an exclusive international license agreement with Philip Simon Brands Group, Inc. for a fashion sneak collection under the Nine West brand.
“While consumer confidence and sentiment continues to be impacted by mixed economic signals, we are cautiously optimistic about the retail environment for the second half,” Card said.
The company’s Board of Directors declared a regular quarterly cash dividend of 5 cents a share to common stockholders of record as of August 12.