Jones Aims for Shoe Growth

Jones Aims for Shoe Growth
Wes Card

NEW YORK — Wes Card is bullish on new footwear projects at Jones Apparel Group.

Following the company’s first-quarter earnings release last week, the CEO told Footwear News that fresh initiatives such as the New Balance for Nine West collection and Shoe Woo retail concept are lucrative opportunities in a challenging climate.

In addition, several of the firm’s established lines have also been bright spots. “The Enzo [Angiolini] line is doing very well in its various penetrations, the fashion elements in Easy Spirit are doing very well and the athletic business is coming back strongly,” Card said.

New Balance for Nine West is also off to a good start, he added. “We have it at 50 of our stores, we are going to expand it to 100 doors in the fall, and we’re testing in several department stores,” Card said.

The CEO was also upbeat about the fall debut of the Rachel Rachel Roy line at Macy’s. “It’s the perfect time to introduce something [in that channel] that’s totally new and fresh with a lot of buzz around it,” he said. “This line will address a contemporary, fashion-forward, younger customer.”

Another growth avenue for the firm is the recently launched Shoe Woo concept.

“We are comping very well on the one Shoe Woo store we have in Edison, N.J.,” Card said, adding that two more openings are planned for Union Station in Washington, D.C., and 59th Street and Lexington Avenue in New York.

“We are going to be cautious and wait for strong evidence before we roll out a lot of stores, but the mall and real estate developers really love the concept and we are getting offers to open up in a number of areas,” Card said.

Overall, however, Jones plans to slim down its retail roster, closing 225 stores in 2009 and 2010.

“One of the areas that’s proving to be increasingly difficult is having small-footprint, single-brand stores in many malls, especially the C- and D-rated malls. There’s just tremendous competition, rents are too high, they are not working effectively,” Card said.

Jones announced the store closings in tandem with its first-quarter earnings release last Wednesday.

For the three months ended April 4, income was $300,000, or zero cents a diluted share, versus $19.5 million, or 23 cents, in the year-ago quarter. Excluding pretax noncash charges for impairment of assets in connection with planned store closures and other items, adjusted earnings per share were 28 cents compared with 37 cents a year ago. Wall Street analysts, who typically exclude one-time charges, expected a profit of 10 cents a share.

Total revenues in the quarter fell 8.6 percent to $891.1 million from $975.4 million, including an 8.7 percent decrease in sales to $879.4 million from $963.4 million. By category, wholesale better apparel revenues fell 10.9 percent to $331 million; wholesale jeanswear gained 3.4 percent to $229.2 million, and wholesale footwear and accessories fell 13.2 percent to $236.9 million.

Retail revenues dropped 11.1 percent to $141.2 million from $158.9 million, and slipped 10.6 percent on a same-store basis.

Footwear outperformed apparel in the first quarter, due in part to sale activity.

“It was highly promotional in January and February, and boots sold very well with all the cold weather. We cleared inventory very well and set up nicely for spring,” Card said.

Despite the promotion at retail, the CEO said Jones has not cut wholesale prices as much as many other companies. “There have been some price reductions here and there, but our price points really fit today’s economy,” he said. “Our costs are down, and we are using that to support margins as we see how the market develops.”

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