Jones Group Inc., the parent of Nine West Group, said it expects fourth fiscal quarter and fiscal year 2010
adjusted earnings per share of 2 cents and $1.50 versus the street
consensus of 11 cents and $1.57 compared. In the year-ago period, it earned 11
cents and $1.14 respectively for the same period a year earlier.

Adjusted earnings per share excludes the effects of impairment and restructuring charges and other items not considered relevant for period over period comparisons.

As reported under generally accepted accounting principles (“GAAP”), the company expects to report full year 2010 earnings per share of approximately 62 cents a share, compared with 2009 full year loss per share of $1.02 and a 2010 fourth quarter loss per share of approximately 47 cents a share, compared with a 2009 fourth quarter loss per share of $1.53. 

The company expects to report full year 2010 adjusted and GAAP net revenues of approximately $3.64 billion, compared with full year 2009 adjusted and GAAP net revenues of approximately $3.33 billion.  Additionally, the company expects to report full year 2010 adjusted operating income of approximately $251 million and GAAP operating income of approximately $148 million, compared with full year 2009 adjusted and GAAP operating income (loss) of $202 million and $(12) million, respectively.

Wesley R. Card, The Jones Group Chief Executive Officer, stated: “Fourth quarter sales in our wholesale and company-owned channels were strong, consistent with the industry, and within our anticipated range.  While our core brands continued to perform well, the retail environment was more promotional than anticipated, particularly in footwear, which impacted our gross margins.  Margins were further impacted by the effect of continued rising costs and a softer market for excess inventory. As a result, we expect gross margins for the full year 2010 to approximate 2009 gross margins and fourth quarter 2010 gross margins to be approximately 340 basis points below those of the 2009 fourth quarter.”

John T. McClain, The Jones Group Chief Financial Officer, commented: “Planned inventory positions for the back half of 2010 were influenced by the strong sales trends that existed in the front half of the year.  As sales trends slowed in the back half, we needed to sell more into the off-price channel to clear that inventory.  We are now well positioned with our inventory and we have tightened our 2011 buy plans to a more conservative approach.”

Card continued: “The performance of our brands has been consistently strong, even in a challenging environment, and for 2011, we believe that our brands are positioned to achieve net revenue growth in mid-single digits.  That said, the strength in consumer spending and acceptance of price increases in 2011 remain uncertain.  In addition, continued cost inflation will present a significant challenge to margins.  We believe that with selective price increases, disciplined execution and the full year impact of our 2010 acquisitions, 2011 gross margins can be at 2010 levels.  In addition, we will control our expenses and reduce when necessary, with the goal of maintaining or improving our operating margin.”

McClain continued: “Our financial position remains strong.  We ended the year with approximately $200 million of cash and an undrawn $650 million revolving credit facility, while investing in working capital to support our growing business.  Throughout 2011, we will maintain a prudent management of inventories and expenses to conserve cash and improve margins.”

Non-Cash Impairment Charges

The company has completed its required annual goodwill and trademark impairment analysis for 2010 and expects fourth quarter and full year 2010 reported results to include a pre-tax, non-cash charge of approximately $38 million ($24 million after-tax) for the impairment of certain trademarks primarily utilized in our wholesale jeanswear business. 

Liquidity and Cash Provided By Operating Activities

The company expects to report approximately $200 million of cash on hand at December 31, 2011, with no amounts drawn under its $650 million revolving credit facility.  Additionally, the company expects to report cash provided by operating activities from 2010 of approximately $140 million.  The company's previous guidance was cash on hand of approximately $170 million and cash provided by operating activities of approximately $120 million.  The increase in cash on hand and in cash provided by operating activities is primarily due to lower than planned working capital requirements.

The company's brands and licensing agreements (L) include: Nine West, Jones New York, Anne Klein, Rachel Roy (L), Robert Rodriguez, Robbi & Nikki, Stuart Weitzman, B Brian Atwood (L), Boutique 9, Easy Spirit, Gloria Vanderbilt, l.e.i, Bandolino, Enzo Angiolini, Nine & Co., GLO, Joan & David, Joneswear, Andrew Marc/Marc Moto (L), Kasper, Energie, Evan Picone, Le Suit, Mootsies Tootsies, Grane, Erika, Napier, Jessica Simpson (L), Dockers (L), Sam & Libby, Givenchy (L), Judith Jack, Albert Nipon and Pappagallo.