Jones Sees More Price Hikes

Jones Sees More Price Hikes
Jones CEO Wesley Card

NEW YORK — The Jones Group Inc. predicts full-year revenues will rise between 3 percent and 6 percent in 2011, despite continuing inflationary headwinds.

While reporting its first-quarter earnings last week, the apparel and footwear company said total revenue for the year is expected to range from $3.8 billion to $3.9 billion, depending partly on price increases, which “will be more pronounced as we move into the second half of the year,” Jones CEO Wesley Card said during a call with analysts.

The company also will manage inventories carefully, as well as spending, in the back half as consumer confidence remains unsteady.

“We’re being very disciplined about the way we’re buying for the back half and we’re not assuming … that the trends are going to continue. We don’t want to end up with excess stock in this environment,” said Jones CFO John McClain.

While apparel sales rose in the single digits in the first quarter, wholesale footwear and accessories revenues jumped 24 percent to $299 million, buoyed mainly by the higher-margin Stuart Weitzman business.

AK Anne Klein, Nine West and Boutique 9 were the best-performing brands in the domestic footwear market, the firm said, while Easy Spirit saw weakness in the athletic and toning categories.

At Nine West, espadrilles have been the top-selling style for spring and should help lift second-quarter sales, said Richard Dickson, president and CEO of branded businesses.

“Espadrilles have been able to command a higher price point than sandals,” he said, adding that sales of that style have already topped $1.5 million since mid-February.

For the quarter ended April 2, Jones earned a net income of $25.7 million, or 30 cents a share, down from $39.2 million, or 45 cents, in the same period a year ago.

Revenue for the period rose 8 percent to $961.3 million, while the cost of goods increased 12 percent to $630.6 million, resulting in gross margins falling to 34.4 percent, from 36.8 percent a year earlier.

Jones ended the quarter with cash and cash equivalents of $306.5 million, a 38 percent increase from the same period a year ago.

Long-term debt increased 59 percent to $834.3 million.

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