Jones Group Q3 Profit Down 56.8% on Costs

In Industry News, What's New by Accessories StaffLeave a Comment

New York–The Jones Group Inc. today reported its third quarter profit plummeted 56.8% weighed down by special charges and a promotional stance at its retail businesses.

For the quarter ended Sept. 29, the parent to Nine West, Stuart Weitzman etc. posted earnings of $17.4 million, or 22 cents a share, from $41 million, or 49 cents a share, in the same year-ago quarter.

However, excluding charges related to severance and the write-down of the cost of some assets related to store closings and other restructuring costs, as well as some gains and charges related to currency fluctuations and other items, the company earned 57 cents a share. Analysts’ average estimate, which typically excludes special items, expected earnings of 32 cents a share.

Total revenue slid down to $1.035 billion compared with $1.043 billion last year.

Sales at the company’s U.S. stores fell 6.7%. Analysts expected sales of $1.05 billion.

“We are pleased with the results we achieved in the third quarter and we continue to see the benefit of conservative inventory planning and control,” said Wesley R. Card, chief executive.

‘Confident’ on Improved Q4

“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. Our international segments continued to perform quite well, especially in the face of a difficult economic climate, particularly in Western Europe,” Card said.

Footwear sales to U.S. department stores rose 9.7% in face of retailers being cautious about ordering product given the uncertainty about consumer spending.

The U.S. wholesale jeans business, which Jones tried unsuccessfully to sell last year, was a bright spot, too, with an 8.2% increase.

Jones ended the quarter with $234 million in cash and “our revolver undrawn,” added John T. McClain, chief financial officer, “Our approach to inventory commitments remains conservative, and we continue to emphasize tight expense control. We believe these actions will enable us to continue to maintain a strong balance sheet.”

Card said the company was “well positioned” for fourth quarter and beyond.

“We have received positive reactions from wholesale customers to our enhanced products across our brands that ship in fourth quarter 2012 and Spring 2013. We are confident that continued product improvement will ultimately translate into increased sales and improved retail performance,” he said.