Shares of Jones Apparel Group Inc. rose 1.5 percent Wednesday after the company said it narrowed its fourth-quarter losses and issued a bullish sales forecast for the new year.
Chief executive officer Wesley R. Card told WWD the company might see some inflationary pressures toward the end of this year and into 2011, but noted the company has “locked in” its factory costs through the third quarter. Boosts in raw materials costs for the fourth quarter can’t be ruled out because those orders haven’t been placed.
Card said the company will continue to take advantage of opportunities, as it did last week with its acquisition of Robert Rodriguez Collection parent Moda Nicola International LLC, but declined to specify the criteria that would be considered.
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“Robert Rodriguez has a terrific opportunity to grow,” Card said. “We don’t want to make acquisitions that are just static with no growth potential. You don’t make acquisitions based on targeted numbers. If you act that way, you make bad acquisitions. We have the strength [on our balance sheet] to move when it is the right one.”
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For the three months ended Dec. 31, Jones registered a net loss of $130.3 million, or $1.53 a diluted share, compared with a loss of $822.9 million, or $9.86, in the year-ago quarter. Excluding the effects of trademark and goodwill impairment, severance and other onetime charges, the adjusted profit from continuing operations was 11 cents a share versus a loss of 4 cents a share a year ago. The 11-cent figure matched analysts’ expectations and fell at the high end of the adjusted earnings of between 8 cents and 11 cents a share projected by Jones last month.
Total revenues for the fourth quarter fell 8.3 percent to $776.7 million from $846.9 million, which included a sales decline of 8.2 percent to $762.8 million from $830.5 million last year. Gross margin improved 480 basis points to 34.3 percent of sales.
Card said he was “encouraged by our improved operating margins and the performance of our retail business, which was profitable in the quarter and posted an increase in comparable-store sales of 2 percent.”
For the year, the loss, inclusive of onetime charges, was $86.3 million, or $1.02 a diluted share, from $765.4 million, or $9.04, in 2008. Total revenues fell 8 percent to $3.33 billion from $3.62 billion, which included a sales decrease of 7.9 percent to $3.28 billion from $3.56 billion.
On the call, chief financial officer John T. McClain said the company will have closed 265 stores by the end of 2010, a 50/50 split between mall-based stores and outlet sites. At the end of 2010, outlet locations will represent 70 percent of the firm’s store base.
McClain told analysts that Jones expects net revenue for 2010 to range from $3.3 billion to $3.48 billion, above the previous estimate of analysts, with better apparel revenue around $1.01 billion to $1.13 billion, reflecting contribution from the Robert Rodriguez acquisition. The wholesale jeanswear business is expected to generate $750 million to $800 million in volume, with footwear and accessories around $925 million to $975 million. Retail sales guidance was in the range of $675 million to $725 million, with comparable store-sales up 2 to 8 percent versus a 4.3 percent decline in comps for 2009.
Shares of Jones Apparel closed at $15.55, up 23 cents, on the New York Stock Exchange Wednesday.