Costs Hits Jones Group Q4 Profit, But Sales Rise

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New London Racer crossbody handbag style by Kurt Geiger, a stellar performer for Jones Group in 2012.

New London Racer crossbody handbag style by Kurt Geiger, a stellar performer for Jones Group in 2012.

New York—Jones Group Inc. reported today that its fourth quarter loss widened due to lower asset valuations, costs and restructuring charges despite an increase in sales.

For the quarter ended Dec. 31, the owner of Nine West, Anne Klein and Stuart Weitzman, posted a loss of $80.3 million, or $1.06 a share, compared to a loss of $21.1 million, or 27 cents a share, in the year ago period. Excluding one-time items, such as charges for declining asset values, costs of recent acquisitions and restructuring, Jones said it had earnings of 14 cents a share, up from 10 cents a share, a year before. That was double the 7 cents a share that analysts’ average projected.

Moreover, sales of the company’s jeans, footwear and accessories mostly to department stores were up even though holiday sales in its own retail and sportswear business “remained challenging and promotional,” according to Wesley Card, chief executive.

Net revenue rose 8.8% to $971.9 million, ahead of the $955.3 million that analysts expected.

Gross margin narrowed 1.2 percentage points to 34.6% with the company noting it would be conservative about inventory levels in 2013 to help improve margins.

Great Potential? Upscale and Contemporary Brands

“Our domestic wholesale footwear and accessories and jeanswear businesses were our best performers, while our structured sportswear business and retail channels remained more challenging and promotional, although we are encouraged with our overall turnaround efforts in these segments,” Card said. “Our international segments continued to perform quite well, especially in the face of a difficult economic climate, particularly in Western Europe.”

Jeanswear sales to U.S. retailers picked up 6.8% while footwear sales rose 5.5%.

Kurt Geiger proved to be the company’s fastest growing brand in 2012 with revenue up 52.5% to $305 million. Meanwhile, Nine West and Jones New York brands were down.

Sales at the company’s own U.S. stores also posted a decline, down 6.6% in the fourth quarter.

For the year, Jones Group lost $56.1 million, or 72 cents a share, compared to a profit of $50.7 million, or 61 cents a share, in 2011. Annual net revenue edged up to $3.8 billion from $3.79 billion.

For 2013, Jones forecast sales to increase 2.6% to 10.8% to $3.9 billion to $4.1 compared to 2012. That’s in line with analysts’ consensus for sales of $3.88 billion.

“We are concentrating our efforts on the areas we believe offer the greatest opportunity for revenue growth–upscale and contemporary brands and international,” Card added.


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