Jones Apparel Group, Inc. reported revenues for the second quarter of 2010 were $860 million, as compared with $804 million for the second quarter of 2009. The company reported adjusted earnings per share 45 cents a share, as compared with adjusted earnings per share of 29 cents in the same period last year.
Results for both periods exclude the impact of acquisition-related charges, the impact of severance and other expenses related to the planned closure of certain company-operated retail stores, and certain other charges.
As reported under generally accepted accounting principles (“GAAP”), the Company reported net income of 30 cents per share for the second quarter of 2010, as compared with net income of 15 cents per share for the same period last year. The 2010 second quarter results include costs and charges of approximately $12 million ($8 million after tax) related to the acquisitions of Stuart Weitzman and Robert Rodriguez and $10 million ($6 million after tax) of other restructuring and strategic review costs. In the prior year quarter, results included charges of approximately $10 million ($6 million after tax) related to the consent solicitation of noteholders and tender offer and the termination of the revolving credit facility and charges of $8 million ($5 million after tax) related to cost savings initiatives and other items.
Wesley R. Card, Jones Apparel Group Chief Executive Officer, stated: “We are very pleased with our second quarter results and the performance of our core brands over the entire Spring/Summer season. Operating margins were much improved and increased in three of the segments compared with the prior year's quarter. Results in Better Apparel and Footwear and Accessories were particularly notable, reflective of sound execution and aggressive inventory management, as well as strong sell-throughs. Jeanswear also continued to perform well and our vertical retail operations results improved, as we remain on track with our retail improvement plan.”
The company noted that it closed 41 retail locations in the second quarter to end the quarter with 880 locations (which includes acquired Stuart Weitzman locations). Consistent with its plan, the company anticipates closing an additional 80 unprofitable locations by the end of 2010.
The following notable events have recently occurred:
- completed the acquisition of a 55% interest in Stuart Weitzman Holdings, LLC, a leading designer and marketer of women's salon footwear;
- entered into an exclusive licensing and distribution agreement with G-III Apparel Group, Ltd. for Andrew Marc men's jeanswear; and
- completed an amendment and extension of its existing $650 million senior credit facility.
Cash provided by operations during the six months was $26 million, compared with cash provided by operations of $74 million in the prior year. The current year results reflect higher earnings offset by higher tax payments and an investment in working capital required to fund revenue growth. The Company continues to have no amounts drawn under its $650 million of committed revolving credit facilities.
John T. McClain, Jones Apparel Group Chief Financial Officer, commented: “We had another solid quarter and our financial position remains strong. We ended the quarter with $133 million of cash, after funding the acquisition of Stuart Weitzman. During the quarter, we received tremendous support from our banking partners in completing an amendment and extension to 2015 of our $650 million credit facility, which remains undrawn. Throughout the remainder of 2010, we will maintain our prudent management of inventories and expenses to conserve cash and improve margins.”
Card concluded: “Moving into the fall season, we are mindful of the current uncertain retail environment and note that recent consumer behavior is more cautious. We are pleased with the contributions of Stuart Weitzman and other recent acquisitions and line expansions, and will continue to search for more opportunities to fill the white space in our portfolio to drive growth. Across the organization, we remain disciplined and committed to performing well, even in challenging macroeconomic conditions.”
The company's Board of Directors has declared a regular quarterly cash dividend of $0.05 per share to all common stockholders of record as of August 13, 2010 for payment on August 27, 2010.