Sales Up But Income Down at Jones Group

Sales Up But Income Down at
Wesley Card

Rising revenues helped mitigate cost increases at The Jones Group Inc. in the first quarter, although income still fell.
 
The New York-based company’s earnings per share of 30 cents was exactly as analysts’ expected, as polled by Yahoo Finance. Adjusted for charges related to the impact of severance, asset impairments in retail locations to be closed and other costs related to restructuring activities, EPS came in at 38 cents, compared with last year’s 47 cents.
 
For the period ended April 2, Jones earned a net income of $25.7 million, a 35 percent decrease from $39.2 million in the same period a year ago. Revenue rose 8 percent to $961.3 million, thanks to the acquisition of Stuart Weitzman and growth across all segments, the firm said. 

But the cost of goods increased 12 percent to $630.6 million, resulting in gross margin falling to 34.4 percent from 36.8 percent a year earlier.
 
Jones CEO Wes Card said in a statement that the cost increases were “in line with expectations and better than the trend we experienced in the second half of 2010, as we effectively managed cost pressures and tightened our inventory plans for 2011.”
 
Card told FN the firm has not seen any consumer resistance to implemented price increases so far, and added he is “cautiously optimistic that … the consumer has been resilient and continues to buy into new and fresh designs. Given the mixed signals in the economic picture, we will continue to plan tightly and exercise discipline in all areas of our operations as we … strengthen and nurture our brand portfolio.”
 
Card declined to comment on reports that Jones is bidding to acquire Jimmy Choo, but reiterated that the company is looking for “companies with great talent, great brands, good balance, distribution.”
 
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 grew 59 percent to $834.3 million.

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