Higher-end Footwear Drives Jones

Higher-end Footwear Drives Jones
Wes Card

NEW YORK — The Jones Group Inc. saw the first fruits of its Kurt Geiger acquisition in the second quarter, and the firm said it is “aggressively reviewing” plans to open retail stores under that banner on both sides of the Atlantic next year.

The British retailer, which Jones acquired in June for $350 million, added $37 million to the group’s top line in the second quarter, and lifted gross margins about 40 basis points.

Looking to 2012, Jones CEO Wesley Card said, “We believe Kurt Geiger and its brands are going to perform very well [in the U.S.], but we’re not going to just roll out 40 doors. Coming through what we’ve come through in domestic retail over the last few years, we’re very cautious and careful. We’re going to … perhaps roll out the Internet sites and get the consumers exposed even earlier to the product.”

Jones’ other high-end footwear asset, Stuart Weitzman, increased group revenue by $33 million, and its operating results grew more than 25 percent from last year, the firm said.

“The higher-end categories … are a primary focus of growth in the near-term,” said Jennifer Black, analyst at Jennifer Black & Associates. “Jones has significant growth potential, especially as the company is in the early stages of entering international markets.”

Jones plans for price increases of between 10 percent and 20 percent in the back half.

Card noted, “The clearing of the debt situation in Washington and having Europe settle down — hopefully in the near term — [are] going to help improve the consumer psyche. Looking at the June comps, so far [the customer] is there and buying into seasonal and fashion-right product.”

Richard Dickson, Jones’ president and CEO of branded businesses, added, “We continue to be bullish around the Nine West brand. We’re launching fragrance [and] sneakers, so [the] brand [continues to] gain more traction with sales across categories.”

Jones earned a second-quarter net income of $5.2 million, or 6 cents a share, down from $25.7 million, or 30 cents, in the same period a year ago. Revenue advanced 3 percent to $887.4 million, driven by strong sales gains in international wholesale and retail. It ended the quarter with $146.4 million in cash and cash equivalents, and $849.7 million in long-term debt.

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