Jones Apparel Group Inc., maker of Nine West shoes, reported net income increased 20% to $12.6 million, or 15 cents a share,
from $10.5 million, or 12 cents, a year earlier. Excluding some items, earnings of 29
cents a share topped the 7 cent average Wall Street estimate.

Revenue in the quarter declined 3.1% to $803.9 million.

Selling, general and administrative expenses narrowed to 29.9% of revenue from 31%. Gross margin widened to 35.1% from 34%.

Wesley R. Card, Jones Apparel Group President and Chief Executive Officer, stated: “We are pleased with our results for the second quarter and the effectiveness of our efforts to manage inventories, costs and expenses, which have proven to be critical in navigating through this unique economic situation. Our revenues were slightly higher than our previous guidance and our gross margin improved from last year, even as we provided additional markdown assistance to our customers. Operating margins increased in each of our wholesale businesses and we were profitable in our retail business, both of which were very gratifying in the face of this highly promotional environment.”

Cash provided by continuing operating activities during the six months was $74 million, compared with cash provided by continuing operations of $98 million in the same period last year. The year-over-year change in cash provided is primarily due to changes in working capital flows and lower operating earnings.

John T. McClain, Jones Apparel Group Chief Financial Officer, commented: “Our balance sheet, liquidity and cash flow remain strong. We ended the quarter with $113 million of cash and our revolver remains undrawn, after completing the tender offer for approximately $240 million of debt. Our total debt balance is $559 million, $221 million less than a year ago, and our debt to total capitalization ratio, net of cash, is 27.2%. Inventories and expenses are well controlled and at what we believe to be the appropriate level for the current environment. We will, however, continue to keep a close focus on these areas, as well as on our supply chain management, throughout the remainder of 2009.”