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NEW YORK CITY-Despite healthy comp-store gains in Jones Apparel Group Inc.’s owned retail units, overall third-quarter revenue slid 6.5% to $1.2 billion, down from $1.33 billion for the same quarter a year ago. Profits dropped to $63 million, down from the previous 3Q total of $76.8 million.

One reason for the slide is the first-quarter sale of the Polo Jeans Co., which contributed $78.4 million to third-quarter 2005 revenues. In addition, the wholesale component of the locally-based apparel supply company served 90 fewer Federated department stores this quarter because of Federated’s massive nationwide consolidation.

Yet, sales at Jones’ retail outlets in general, and at Barney’s in particular, outperformed. Comp store sales from the company’s owned footwear and ready-to-wear stores, excluding Barney’s, rose 5.1% during this third quarter, compared to the same quarter of 2005.

The gains were led by footwear, especially Nine West units, where retail sales exceeded projections. While footwear sales increased, however, jewelry business “is struggling,” management said.

Barney’s is not. The Barney’s New York luxury retail component generated a comp-store sales increase of 12.4%. Calling Barney’s “a stellar performer,” during a conference call, Peter Boneparth, Jones’ president and CEO, said, “it continues to exceed our expectations.”

New Barney’s flagships opened in Dallas and Boston during the quarter, “ready for Christmas.” Six new Barney’s are planned for next year, including flagships in San Francisco and Las Vegas.

Of the company’s overall business, Boneparth said, “in light of diminished real estate, we believe our brands are picking up share. Dress business is terrific, a trend we expect to see continue through 2007, and we are the largest provider of dresses in the department store channel.

“Our relationship with Federated, Belk and others has never been better,” he added. Federated is trading up to some of Jones’ better brands, according to Boneparth, and his company is launching Jones Wear Studio with JC Penney.

At retail, the core apparel and footwear brands, including Jones New York, Nine West, Anne Klein, Gloria Vanderbilt and circa Joan & David, are showing “solid performance,” Boneparth said. “However, we are not immune from the many near-term uncertainties that continue to impact our industry.”As such, we continue to monitor the risks associated with volatile consumer spending patterns, consolidation in our wholesale distribution channel, historically high fuel prices and increased interest rates, which combine to form meaningful challenges. We remain cautiously optimistic for the remainder of the year,” he concluded.

As GSR previously reported, Jones management was considering a sale of the company, but took it off the selling block this August. At that time, Boneparth said, “the levels of indicated interest did not justify the sale.” He also put to rest rumors that parts of the business might be sold separately, adding, “we continue to hold fast to the belief that the whole is more than the sum of the parts.”

JNY stock closed at $32.29 a share on the NYSE at the end of trading on Wednesday, Oct. 25, down nearly 2.9% for the day. The 52-week high of $36.10 a share occurred on March 23 this year, while the 52-week low of $26.95 occurred nearly a year ago on Oct. 27, 2005.

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