Jones Apparel 4Q Profit Climbs

Net income slipped to $274.3 million for the full year, or $2.30 cents per share, compared with $301.8 million, or $2.39 per share for the full year in 2004. Revenues increased to $1.22 billion in the fourth quarter, compared with $1.08 billion for the fourth quarter of 2004, while full-year revenues climbed to $5.07 million from $4.64 million.

Jones officials, discussing the financial results during a conference call with financial analysts Wednesday, said they were pleased with the company's financial performance but also are determined to improve upon it. Among other factors affecting Jones, the company cited the Federated-May Co. merger, which combines two of Jones' biggest customers and thus holds the prospect of cutting into sales.

Peter Boneparth, president and CEO of Jones apparel, called the Barneys chain "an extremely good story for us," pointing out that the luxury chain posted an 8% comparable store sales increase for the fourth quarter, bringing the full year comparable store sales increase to 10.8% for Barneys. Boneparth called Barney's performance "spectacular." Barneys operates 25 stores that include three flagships, three regional locations, eight co-ops and 11 outlets. In addition to opening an outlet in the first quarter, Jones is preparing for the opening of a flagship in Boston and a store in Dallas in the fall. "We are looking at or preparing to sign leases for 2007 and 2008 and beyond," Boneparth said. "We think that there is a substantial opportunity for growth."

Jones also plans to continue opening store locations under new concepts, such as Anne Klein, and to introduce accessories store locations during 2006.

Besides the financial improvement that Jones Apparel showed in the fourth quarter, the company has initiated strategies designed to further improve its performance over the long term, according to Boneparth's remarks during the conference call. "A lot of what went on in the fourth quarter was not expressed in the financial results of the quarter but is in the process changes that we are making, all to position ourselves to improve our profitability," the Jones CEO said.

One part of the strategy has been to reduce the Jones Apparel sales concentration to the company's largest wholesale customer, Federated Department Stores, to represent 19% of gross sales in 2005, as compared to 26% in 2004. In addition, Boneparth said Wednesday, Jones has implemented cost-savings measures designed to make up for the loss of sales that's associated with the Federated-May merger.

Jones has targeted $100 million of cost savings to offset the impact of the merger, with about $30 million of that savings anticipated in 2006 and most of the $100 million of savings in 2007 "to neutralize the loss of sales," Boneparth said. The company will continue to focus on saving money in its supply chain management, manufacturing and general and administrative expenses, he said.

Boneparth called the company's Gloria Vanderbilt business one of the highlights of the past year, saying that the Gloria Vanderbilt name " is almost a misnomer at this point." He explained that, "When you think about Gloria Vanderbilt, you think of one brand, but that business has morphed into a number of brands and has leveraged a lot of our core capabilities."

Besides the Barneys New York, Anne Klein and Gloria Vanderbilt businesses, Jones Apparel Group Inc. operates Jones New York, Evan-Picone, Norton McNaughton, Erika, l.e.i., Energie, Nine West, Easy Spirit, Enzo Angiolini, Bandolino, Joan & David, Mootsies Tootsies, Sam & Libby, Napier, Judith Jack, Kasper, Albert Nipon and Le Suit brands, The company also markets costume jewelry under the Givenchy brand licensed from Givenchy Corp. and footwear under the Dockers Women brand licensed from Levi Strauss & Co.