New York—While The Jones Group Inc. reported today that its third quarter net income rose 42%, the company missed sales forecasts and lowered its full year outlook.
For the quarter ended Oct. 1, the parent company of Nine West, Anne Klein, Jones New York, Stuart Weitzman saw its net income rise to $39.6 million, or 49 cents a share, from $27.8 million, or 34 cents a share, last year. Excluding one-time items, income totaled 48 cents a share, the company said.
Revenue rose 2% to $1.03 billion from $1.01 billion last year.
Although Jones Group’s income exceeded analysts’ average estimate for 45 cents a share, sales fell short of their $1.09 billion expectation.
Plans to Sell Jeans Division
Gross margin rose to 35.7% from 33.5% on the higher sales as costs were trimmed and its Kurt Geiger shoe brand, which it acquired in June, also bolstered margins.
“Our performance for the third quarter is a reflection of our focus on controlling costs and inventory. Despite a promotional retail environment, we achieved results that were in line with our expectations,” Wesley Card, Jones’ ceo, said.
He also told analysts in a conference call that sales of basics and lower priced items had been weaker. But the company expects its gross margin to improve as it focuses on its luxury branded business and as it divests its lower margin jeans division.
Asked about rumors that Jones is in talks with Delta Galil Industries, Ltd., an Israel-based private label apparel company, Card declined comment. The jeans division could sell for between $350 million to $450 million, analysts said.
Nonetheless, shares in the company dropped in early trading today as the company updated its full-year revenue guidance of as much as $3.87 billion, below the $3.97 million that analysts’ average estimates expects.
Citing the “mixed signals” consumers are getting about the economy, Card told analysts, “The level of consumer spending continues to be a question mark as we move into the fourth quarter. The consumer remains very much in a buy-now/wear- now mode and is responding to new fashion and promotional activity.”
Jones Group also inked a deal in September with Marchon Eyewear Inc. to develop and distribute Nine West optical eyewear and sunglasses.