The Jones Group Inc. Reports 2012 Third Quarter Financial Results

NEW YORK, Oct. 24, 2012 /PRNewswire/ -- The Jones Group Inc. (NYSE: JNY; the "Company") today reported results for the third quarter ended September 29, 2012.  Revenues for the third quarter of 2012 were $1,035 million, as compared with $1,043 million for the third quarter of 2011.     

The Company reported adjusted earnings per share of $0.57 for the third quarter of 2012, as compared with adjusted earnings per share of $0.48 for the same period last year.  The results for both periods include gains and charges relating to balances denominated in foreign currencies.  The current year quarter includes net gains of approximately $7 million ($5 million after tax), or $0.06 per share, whereas in the prior year quarter, net charges of $5 million ($3 million after tax), or $0.04 per share, were realized.  Results for both periods also include the favorable impacts of tax law changes in the United Kingdom, which were approximately $4 million after tax ($0.05 per share) in the third quarter of 2012 and approximately $4 million after tax ($0.05 per share) in the third quarter of 2011. The adjusted results exclude charges related to the impact of severance, asset impairments in retail locations to be closed and other costs related to restructuring activities, certain acquisition-related costs and other costs not considered relevant for period-over-period comparisons (see reconciliation of adjusted earnings to reported earnings in the accompanying schedule).    

As reported under generally accepted accounting principles ("GAAP"), the Company reported third quarter earnings per share of $0.22 in 2012 and $0.49 per share in 2011.  The 2012 third quarter results include, among other items, costs and charges of approximately $38 million ($29 million after tax) and the 2011 third quarter results include a $3 million ($2 million after tax) reduction  in costs and charges related to lease liabilities of unused facilities, impairments and other costs relating to the planned closure of certain Company-operated retail stores, as well as other restructuring and cost savings initiatives.  For both periods, such amounts also include adjustments to the future payment liabilities associated with the Stuart Weitzman and Robert Rodriguez acquisitions.  The 2012 third quarter also includes a gain of $3 million ($2 million after tax) relating to the sale of the Sam & Libby trademark.     

Wesley R. Card, The Jones Group Chief Executive Officer, stated: "We are pleased with the results we achieved in the third quarter and we continue to see the benefit of conservative inventory planning and control.  Our domestic wholesale footwear and accessories and jeanswear businesses were our best performers, while our structured sportswear business and retail channels remained more challenging and promotional.  Our international segments continued to perform quite well, especially in the face of a difficult economic climate, particularly in Western Europe."

The Company ended the quarter with $234 million in cash and generated cash from operating activities during the nine months of $13 million, compared with $6 million in the prior year period.  At September 29, 2012, the Company had no amounts drawn under its $650 million of committed revolving credit facilities.

John T. McClain, The Jones Group Chief Financial Officer, commented: "Our financial position remains strong.  We ended the quarter with $234 million in cash and our revolver undrawn.  Our approach to inventory commitments remains conservative, and we continue to emphasize tight expense control.  We believe these actions will enable us to continue to maintain a strong balance sheet." 

Mr. Card concluded: "We believe we are well positioned for the fourth quarter and as we enter 2013 to continue to execute on our strategic plan.  We have received positive reactions from wholesale customers to our enhanced products across our brands that ship in fourth quarter 2012 and Spring 2013.  We are confident that continued product improvement will ultimately translate into increased sales and improved retail performance."

The Company's Board of Directors has declared a regular quarterly cash dividend of $0.05 per share to all common stockholders of record as of November 9, 2012, for payment on November 23, 2012.

The Company will host a conference call with management to discuss these results at 8:30 a.m. Eastern Time today, which is accessible by dialing 412-858-4600 or through a web cast at www.jonesgroupinc.com (under Investor Relations/Conference Schedule). The call will be recorded and made available through November 1, 2012 and may be accessed by dialing 877-344-7529.  Enter account number 10019334.  A slide presentation will accompany the prepared remarks and has been posted with the webcast on the Company's website. 

Presentation of Information in the Press Release

Financial information discussed in this press release includes both GAAP and non-GAAP measures, which include or exclude certain items.  These non-GAAP measures differ from reported results and are intended to illustrate what management believes are relevant period-over-period comparisons.  A complete reconciliation of the GAAP measures presented to the comparable non-GAAP information appears in the financial tables section of this press release. 

About The Jones Group Inc.

The Jones Group Inc. (www.jonesgroupinc.com) is a leading global designer, marketer and wholesaler of over 35 brands with product expertise in apparel, footwear, jeanswear, jewelry and handbags.  The Jones Group has a reputation for innovation, excellence in product quality and value, operational execution and talent.  The Company also markets directly to consumers through branded specialty retail and outlet stores, through concessions at upscale department stores and through its e-commerce sites.

The Company's internationally recognized brands and licensing agreements (L) include: Nine West, Jones New York, Anne Klein, Kurt Geiger, Rachel Roy (L), Robert Rodriguez, Robbi & Nikki, Stuart Weitzman, Brian Atwood (L), Boutique 9, Easy Spirit, Carvela, Gloria Vanderbilt, l.e.i., Bandolino, Enzo Angiolini, Nine & Co., GLO, Joan & David, Miss KG, Kasper, Energie, Evan-Picone, Le Suit, Mootsies Tootsies, Grane, Erika, Napier, Jessica Simpson (L), Givenchy (L), Judith Jack, Albert Nipon, Pappagallo and Rafe (L). 

Forward Looking Statements

Certain statements contained herein are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  All statements regarding the Company's expected financial position, business and financing plans are forward-looking statements.  The words "believes," "expects," "plans," "intends," "anticipates" and similar expressions identify forward-looking statements.  Forward-looking statements also include representations of the Company's expectations or beliefs concerning future events that involve risks and uncertainties, including:

  • those associated with the effect of national, regional and international economic conditions;
  • lowered levels of consumer spending resulting from a general economic downturn or lower levels of consumer confidence;
  • the tightening of the credit markets and the Company's ability to obtain capital on satisfactory terms;
  • given the uncertain economic environment, the possible unwillingness of committed lenders to meet their obligations to lend to borrowers, in general;
  • the performance of the Company's products within the prevailing retail environment;
  • customer acceptance of both new designs and newly-introduced product lines;
  • the Company's reliance on a few department store groups for large portions of the Company's business;
  • the Company's ability to identify acquisition candidates and, in a competitive environment for such acquisitions, acquire such businesses on reasonable financial and other terms;
  • the integration of the organizations and operations of any acquired businesses into the Company's existing organization and operations;
  • consolidation of the Company's retail customers;
  • financial difficulties encountered by the Company's customers;
  • the effects of vigorous competition in the markets in which the Company operates;
  • the Company's ability to attract and retain qualified executives and other key personnel;
  • the Company's reliance on independent foreign manufacturers, including political instability in countries where contractors and suppliers are located;
  • changes in the costs of raw materials, labor, advertising and transportation, including the impact such changes may have on the pricing of the Company's products and the resulting impact on consumer acceptance of the Company's products at higher price points;
  • the Company's ability to successfully implement new operational and financial information systems; and
  • the Company's ability to secure and protect trademarks and other intellectual property rights.

A further description of these risks and uncertainties and other important factors that could cause actual results to differ materially from the Company's expectations can be found in the Company's Annual Report on Form 10-K for the year ended December 31, 2011, including, but not limited to, the Statement Regarding Forward-Looking Disclosure and Item 1A-Risk Factors therein, and in the Company's other filings with the Securities and Exchange Commission.  Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, such expectations may prove to be incorrect.  The Company does not undertake to publicly update or revise its forward-looking statements as a result of new information, future events or otherwise.

 

THE JONES GROUP INC.


CONSOLIDATED OPERATING RESULTS


(UNAUDITED)









All amounts in millions, except per share data



















THIRD QUARTER


FISCAL NINE MONTHS







2012


2011


2012


2011



















Net sales



$  1,024.6

99.0

%

$  1,030.1

98.8

%

$  2,792.3

98.8

%

$  2,855.9

98.8

%

Licensing income


10.5

1.0


12.7

1.2


33.0

1.2


35.1

1.2


Other revenues



0.3

0.0


0.2

0.0


0.9

0.0


0.7

0.0



















Total revenues



1,035.4

100.0


1,043.0

100.0


2,826.2

100.0


2,891.7

100.0



















Cost of goods sold


670.8

64.8


671.1

64.3


1,792.0

63.4


1,866.1

64.5



















Gross profit



364.6

35.2


371.9

35.7


1,034.2

36.6


1,025.6

35.5



















SG&A expenses



301.9

29.2


311.5

29.9


909.6

32.2


859.2

29.7



















Operating income


62.7

6.1


60.4

5.8


124.6

4.4


166.4

5.8



















Net interest expense and financing costs (1)


(37.7)

(3.6)


(0.7)

(0.1)


(89.2)

(3.2)


(58.8)

(2.0)


Equity in income of unconsolidated affiliate


-

-


0.5

0.0


1.4

0.0


2.6

0.1



















Income before provision for income taxes


25.0

2.4


60.2

5.8


36.8

1.3


110.2

3.8


Provision for income taxes


7.2

0.7


19.0

1.8


11.6

0.4


37.8

1.3



















Net income



17.8

1.7


41.2

4.0


25.2

0.9


72.4

2.5



















Less: income attributable to noncontrolling interests

0.4

0.0


0.2

0.0


0.9

0.0


0.6

0.0



















Income attributable to Jones


$       17.4

1.7

%

$       41.0

3.9

%

$       24.3

0.9

%

$       71.8

2.5

%


















Earnings per share (2)















Net income



$       17.8



$       41.2



$       25.2



$       72.4




Less: income attributable to noncontrolling interests

0.4



0.2



0.9



0.6




Income attributable to Jones


17.4



41.0



24.3



71.8




Less: income allocated to participating securities

0.4



1.4



0.4



2.2




Income available to common stockholders of Jones

$       17.0



$       39.6



$       23.9



$       69.6




















Shares outstanding - diluted


75.4



80.3



76.1



82.3




















Earnings per share  - diluted


$       0.22



$       0.49



$       0.31



$       0.85




















Percentages may not add due to rounding.


















(1)

Refer to item "i" on the Reconciliation of Non-GAAP Measures to GAAP for amounts impacting interest









expense relating to adjustment of remaining consideration payable related to acquisition of Stuart









Weitzman.

























(2)

Earnings per share is calculated under the "two-class method," where income is allocated between









common shares and participating securities (unvested restricted shares held by employees that have









a nonforfeitable right to dividends).  Both our common shares and participating securities share 









equally in dividend payments and earnings.








 

THE JONES GROUP INC.

Reconciliation of Non-GAAP Measures to GAAP

for the quarters and nine months ended September 29, 2012 and October 1, 2011

(UNAUDITED)

































All amounts in millions, except per share data


THIRD QUARTER


FISCAL NINE MONTHS






2012


2011


2012


2011

Operating income



$     62.7



$        60.4



$ 124.6



$      166.4

Adjustments:














Items affecting segment income:














Expenses related to retail store closure plan (a)



(0.1)



3.1



1.5



3.4


Charges related to acquired businesses (b)



3.3



2.1



3.5



(3.8)


Other business development costs (c)



0.2



0.9



0.9



6.3


Present value adjustments to lease liabilities for properties not in use (d)


8.3



(0.1)



17.6



12.4


Severance and other charges related to executive management changes (e)


-



-



5.9



-


Gain on the sale of a trademark (f)



(3.1)



-



(3.1)



-


Other restructuring expenses and certain other charges (g)



1.7



3.4



15.1



4.8

Total adjustments to operating income



10.3



9.4



41.4



23.1

Adjusted operating income



$     73.0



$        69.8



$ 166.0



$      189.5

















Income attributable to Jones (as reported)



$     17.4



$        41.0



$   24.3



$        71.8

Provision for income taxes



7.2



19.0



11.6



37.8

Adjustments to operating income, from above



10.3



9.4



41.4



23.1

Adjustments to deferred financing costs (h)



-



-



-



1.9

Adjustment of remaining consideration payable related to acquisition













of Stuart Weitzman (i)



24.3



(12.8)



47.8



19.0

Adjusted income before provision for income taxes



59.2