Jones Apparel Group, Inc. (NYSE: JNY) today reported results for the first quarter ended April 2, 2005. Revenues totaled $1,349.3 million versus $1,218.1 million for the first quarter of 2004. Earnings per share were $0.71 for the first quarter of 2005, as compared to $0.73 in the same period last year.
Peter Boneparth, President and Chief Executive Officer, stated, "Our first quarter results were better than we had anticipated, partially as we benefited from approximately $27 million in net shipments and approximately $11 million in associated operating income during the first quarter, which we had planned in second quarter. The better than expected results were primarily realized in our better wholesale apparel businesses. Comparable store sales from our owned footwear and ready-to-wear stores (excluding Barneys New York) were down 3.7% versus an increase of 13% in the prior year. We are very encouraged by the continued strong performance of our Barneys New York luxury retail business that generated a comparable store sales increase of 10.7% in the quarter, as compared to 18.7% in the first quarter of 2004. These positives were offset by weakness in our wholesale footwear, accessories and junior denim businesses. Gross margin pressure in these businesses dampened our performance and overall results."
Wesley Card, Chief Operating and Financial Officer, commented, "The acquisitions of Maxwell Shoe and Barneys New York added $180.7 million to revenues during the quarter, partially offset by decreases in our wholesale footwear and accessories business, and our l.e.i. junior denim business. Our operating profit margin for the quarter was 11.7%, compared to 13.3% in the prior year. This decrease was primarily a result of gross margin pressure within our footwear and accessories businesses and our l.e.i. junior denim business. Our operating cash flow during the period improved by $25.1 million over first quarter 2004, as our working capital planning remained disciplined."
Mr. Card added, "Inventory at the end of the first quarter totaled $645.8 million, compared to $570.0 million at the end of the prior year period. Exclusive of Maxwell Shoe and Barneys New York inventory, which were acquired during the third and fourth quarters of 2004, respectively, inventory at the end of the first quarter 2005 totaled $552.9 million, a 3.0% decrease from the year-earlier period. Our accounts receivable at the end of the first quarter was $680.6 million, compared to $638.5 at the end of the prior year period. Excluding acquisitions, accounts receivable decreased $28.6 million, or 4.5%. We ended the quarter with $1,346.4 billion of funded debt and, net of $45.4 million cash on hand, our debt to book capitalization ratio was 32.6%, in line with our expectations. During the quarter, we repurchased approximately 1.4 million shares of common stock in the open market at an aggregate cost of $45.3 million, or $33.16 per share."
Mr. Boneparth concluded, "We feel it is prudent to maintain a cautious outlook for the remainder of the year with customer consolidation and macroeconomic issues potentially creating consumer concerns. Therefore, we are tightening our 2005 expected revenue to a range of $5.20 to $5.25 billion, and our projected earnings per share to a range of $2.75 to $2.85. Over the long term, we remain confident in our multi-brand, multi-channel business model, which serves as the cornerstone of our strategy."
The Company's Board of Directors has declared a regular quarterly cash dividend of $0.10 per share to all common stockholders of record as of May 20, 2005 for payment on June 3, 2005. The Board of Directors has also authorized an additional $150 million share repurchase program, leaving $246 million available as of the end of the first quarter.
The Company will host a conference call with management to discuss these results and its outlook for 2005 at 8:30 a.m. eastern time today, which is accessible by dialing 412-858-4600 or through a web cast at http://www.jny.com. The call will be recorded and made available through May 13 and is accessible by dialing 877-344-7529. Enter account number 370375.
Jones Apparel Group, Inc. (http://www.jny.com), a Fortune 500 company, is a leading designer, marketer and wholesaler of branded apparel, footwear and accessories. We also market directly to consumers through our chain of specialty retail and value-based stores, and operate the Barneys chain of luxury stores. Our nationally recognized brands include Jones New York, Evan- Picone, Norton McNaughton, Gloria Vanderbilt, Erika, l.e.i., Energie, Nine West, Easy Spirit, Enzo Angiolini, Bandolino, Joan & David, Mootsies Tootsies, Sam & Libby, Napier, Judith Jack, Kasper, Anne Klein, Albert Nipon, Le Suit and Barneys New York. The Company also markets apparel under the Polo Jeans Company brand licensed from Polo Ralph Lauren Corporation, costume jewelry under the Tommy Hilfiger brand licensed from Tommy Hilfiger Licensing, Inc. and the Givenchy brand licensed from Givenchy Corporation and footwear under the Dockers Women brand licensed from Levi Strauss & Co. Each brand is differentiated by its own distinctive styling, pricing strategy, distribution channel and target consumer. We primarily contract for the manufacture of our products through a worldwide network of quality manufacturers. We have capitalized on our nationally known brand names by entering into various licenses for several of our trademarks, including Jones New York, Evan-Picone, Anne Klein New York, Nine West, Gloria Vanderbilt and l.e.i., with select manufacturers of women's and men's products which we do not manufacture. For more than 30 years, we have built a reputation for excellence in product quality and value, and in operational execution.
Certain statements contained herein are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements regarding the Company's expected financial position, business and financing plans are forward-looking statements. The words "believes," "expects," "plans," "intends," "anticipates" and similar expressions identify forward-looking statements. Forward-looking statements also include representations of the Company's expectations or beliefs concerning future events that involve risks and uncertainties, including:
-- those associated with the effect of national and regional economic conditions; -- lowered levels of consumer spending resulting from a general economic downturn or lower levels of consumer confidence or generally reduced shopping activity caused by public safety concerns; -- the performance of the Company's products within the prevailing retail environment; -- customer acceptance of both new designs and newly-introduced product lines; -- the Company's reliance on a few department store groups for large portions of the Company's business; -- consolidation of the Company's retail customers; -- financial difficulties encountered by customers; -- the effects of vigorous competition in the markets in which the Company operates; -- the Company's ability to identify acquisition candidates and acquire such businesses on reasonable financial and other terms, in an increasingly competitive environment for such acquisitions; -- the integration of the organizations and operations of any acquired businesses into the Company's existing organization and operations; -- the Company's reliance on independent foreign manufacturers; -- changes in the costs of raw materials, labor and advertising; -- the general inability to obtain higher wholesale prices for the Company's products that the Company has experienced for many years; -- the uncertainties of sourcing associated with the new environment in which quota has been eliminated on apparel products while political pressure is building for the re-imposition of quotas in certain categories; and -- the Company's ability to secure and protect trademarks and other intellectual property rights.
A further description of these risks and uncertainties and other important factors that could cause actual results to differ materially from the Company's expectations can be found in the Company's Annual Report on Form 10- K/A for the fiscal year ended December 31, 2004, including, but not limited to, the Statement Regarding Forward-Looking Disclosure and the information concerning trends and risk factors included in Management's Discussion and Analysis of Financial Condition and Results of Operations therein, and in the Company's other filings with the Securities and Exchange Commission. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, such expectations may prove to be incorrect. The Company does not undertake to publicly update or revise its forward-looking statements as a result of new information, future events or otherwise.
Posted May 5, 2005
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