Jones Apparel Group, Inc. Reports 2009 First Quarter Results

NEW YORK, April 29 /PRNewswire-FirstCall/ -- Jones Apparel Group, Inc. (NYSE:
JNY) today reported results for the first quarter ended April 4, 2009.
Revenues for the first quarter of 2009 were $891 million, as compared with
$975 million for the first quarter of 2008. The decrease in revenues of 8.6%
was reflective of overall economic conditions that are affecting retail sales
and was realized across all of the Company's segments except wholesale
jeanswear, which reported increased revenues of 3.4% compared with the prior
year.

The Company reported adjusted earnings per share ("EPS") of $0.28 for the
first quarter of 2009, as compared with adjusted earnings per share of $0.37
in the same period last year. These results exclude the non-cash impairment of
assets related to the planned closure of certain Company-owned retail stores,
the related impact of severance and other expenses related to this strategic
restructuring, and certain other charges (see reconciliation of adjusted
earnings to reported earnings in the accompanying schedule).

As reported under generally accepted accounting principles ("GAAP"), the
Company reported earnings per share of $0.00 for the first quarter of 2009, as
compared with earnings per share of $0.23 for the same period last year. The
2009 first quarter results include, among other items, non-cash retail store
asset impairment charge of approximately $21 million ($14 million after tax)
related to Company operated stores within the retail segment and a charge of
$14 million ($9 million after tax) related to other cost savings initiatives.

Wesley R. Card, Jones Apparel Group President and Chief Executive Officer,
stated: "Given the overall economic environment, we were satisfied with our
first quarter results, which reflect the actions we have taken to control
expenses and manage our capital. Our wholesale jeanswear segment performed
well; however, our other wholesale businesses were impacted by reduced orders
and higher markdown support in the continuing promotional environment. Our
own chain of retail stores was impacted by the slowing retail sales trend and
promotional environment and registered a 10.6% decrease in comparable store
sales during the quarter."

Retail Improvement Strategy and Cost-Reduction Initiatives

The Company reevaluated its Company operated retail store strategy given
economic conditions and trends, and has adopted a plan to right-size the
retail portfolio, with the goal of enhancing segment profitability and
improving return on invested capital. As part of this strategy, the Company
plans to exit approximately 225 locations throughout 2009 and 2010 and will
also continue to test and evaluate new concepts, such as ShoeWoo. As a matter
of course, the Company continually evaluates its portfolio of stores, and now
is an opportune time to take action as this plan can be adopted with the use
of minimal cash expenditures. The Company anticipates expense savings and the
elimination of unprofitable store locations to improve results by $3 million
in 2009, $14 million in 2010 and $20 million in 2011. These actions will also
reduce future capital expenditures relating to such locations.

In addition to the retail improvement strategy, the Company implemented
additional cost savings actions during the first quarter to further align the
Company's cost structure with anticipated demand levels and to preserve
financial flexibility. The cost savings initiatives underway, which are in
addition to those implemented in 2008, largely include personnel reductions,
and are expected to result in annual savings of approximately $20 million.
Such actions began during the first quarter and the Company expects that full
year 2009 will benefit by approximately $13 million ($9 million after tax).

Mr. Card continued: "While overall results are still reflective of low
consumer confidence and spending levels, we believe that there is enhanced
value to be realized in our businesses through continued prudent cost
management and creative marketing and branding. The time is also right to
implement our comprehensive strategy to return our retail segment to
profitability, as we have many leases expiring in the next two years."

John T. McClain, Jones Apparel Group Chief Financial Officer, commented, "We
continue to manage costs and have identified $20 million in annual savings in
2009, which is in addition to the $33 million in annual SG&A savings we
implemented at the end of 2008 and the $17 million of cost increases we
avoided by freezing salaries and wages."

Cash used by operations during the quarter was $139 million, compared with
cash used by operations of $66 million in the prior year. The year-over-year
change in cash used is primarily due to changes in working capital flows, the
receipt of a $23 million tax refund in the prior year and lower operating
earnings. Working capital flows were impacted by the timing of cash
disbursements and less seasonal inventory decreases due to an inventory
increase to support the Company's l.e.i. business. The Company continues to
have no amounts drawn under its $600 million of committed revolving credit
facilities.

The following notable events have recently occurred:
-- announced the launch of Rachel Rachel Roy, a contemporary line,
including sportswear, footwear and accessories, which will debut in
August 2009;
-- began selling New Balance for Nine West at select Nine West and New
Balance stores, on-line at www.ninewest.com and internationally;
-- launched an e-commerce site for our Anne Klein brand at
www.anneklein.com;
-- introduced Nine Loves, a Nine West rewards program, at our retail
stores
and on www.ninewest.com;
-- announced an improvement strategy to return Company-owned retail
stores
to profitability; and

-- near completion of new multi-year senior secured credit facility and
debt tender offer to enhance financial flexibility.

As announced on April 1, 2009, the Company is pursuing a new senior secured
credit facility for up to $650 million, which will replace its existing $600
million credit facility that expires in May 2010. The new three-year facility
will provide the Company with significantly greater flexibility, while
providing term certainty to weather the current difficult economic
environment. The Company concurrently undertook a debt tender solicitation
for its $250 million of notes due November 2009. Approximately $240 million
of notes will be tendered in connection with the offering. The Company will
primarily use cash on hand to fund this debt retirement.

Mr. McClain continued: "Our financial position remains strong. We ended the
quarter with $194 million of cash, approximately the same as last year, and
our revolver continues to be undrawn. We anticipate that we will close on our
new credit facilities and debt tender within the next week. With the closing
of these transactions, we will reduce our outstanding debt by over $240
million and extend the tenor of our bank facilities to April 2012. The new
agreement reduces financial covenants and provides ample liquidity for our
operations. We are very pleased to be completing these transactions during
such an uncertain time in the capital markets."

Mr. Card concluded: "Consistent with past actions, we are taking the necessary
steps towards operational excellence, including aggressive inventory
management, optimizing our distribution channels and updating our technology
infrastructure. We remain cautious in our outlook for 2009, and as the year
progresses, our focus will be on financial stability, maintaining our market
share and positioning the Company for the ultimate recovery."

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 May 15,
2009 for payment on May 29, 2009.

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.jonesapparel.com. The call will be
recorded and made available through May 7, 2009 and may be accessed by dialing
877-344-7529. Enter account number 429810. A slide presentation will
accompany the prepared remarks and has been posted on the investor relations
section of 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 reported GAAP results to the comparable non-GAAP information
appears in the financial tables section of this press release.

About Jones Apparel Group, Inc.
Jones Apparel Group, Inc. (www.jonesapparel.com) is a leading designer,
marketer and wholesaler of branded apparel, footwear and accessories. The
Company also markets directly to consumers through its chain of specialty
retail and value-based stores. The Company's nationally recognized brands
include Jones New York, Nine West, Anne Klein, Gloria Vanderbilt, Kasper,
Bandolino, Easy Spirit, Evan-Picone, l.e.i., Energie, Enzo Angiolini, Joan &
David, Mootsies Tootsies, Sam & Libby, Napier, Judith Jack, Albert Nipon and
Le Suit. The Company also markets costume jewelry under the Givenchy brand
licensed from Givenchy Corporation, footwear under the Dockers Women brand
licensed from Levi Strauss & Co., and apparel under the Rachel Roy brand
licensed from Rachel Roy IP Company, LLC. Each brand is differentiated by its
own distinctive styling, pricing strategy, distribution channel and target
consumer. The Company contracts for the manufacture of its products through a
worldwide network of quality manufacturers. The Company has capitalized on
its nationally known brand names by entering into various licenses for several
of its trademarks, including Jones New York, Anne Klein New York, Nine West,
Gloria Vanderbilt, l.e.i. and Evan-Picone, with select manufacturers of
women's and men's products which the Company does not manufacture. For more
than 30 years, the Company has built a reputation for excellence in product
quality and value, and in operational execution.

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,"
"expect," "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 our ability to obtain credit
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;
-- consolidation of the Company's retail customers;
-- financial difficulties encountered by 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;
-- changes in the costs of raw materials, labor, advertising and
transportation;
-- the general inability to obtain higher wholesale prices for the
Company's products that the Company has experienced for many years;
-- the uncertainties of sourcing associated with an environment in which
general quota has expired on apparel products but litigation and
political activity seeking to re-impose quotas have been initiated;
-- the Company's ability to successfully implement new operational and
financial computer 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, 2008, 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.

JONES APPAREL GROUP, INC.
CONSOLIDATED OPERATING RESULTS
(UNAUDITED)

All amounts in millions except per share data

FIRST QUARTER
-------------
2009 2008
---- ----

Net sales $879.4 98.7% $963.4 98.8%
Licensing income 11.5 1.3 11.5 1.2
Other revenues 0.2 0.0 0.5 0.1
--- --- --- ---

Total revenues 891.1 100.0 975.4 100.0

Cost of goods sold 597.8 67.1 654.7 67.1
----- ---- ----- ----

Gross profit 293.3 32.9 320.7 32.9

SG&A expenses 279.6 31.4 280.8 28.8
----- ---- ----- ----

Income from operations 13.7 1.5 39.9 4.1

Net interest expense
and financing costs (12.9) (1.4) (9.7) (1.0)

Gain on sale of interest
in Australian joint venture - - 0.3 0.0
Equity in loss of
unconsolidated affiliate (0.3) 0.0 - -
---- --- -- --

Income before provision for
taxes 0.5 0.1 30.5 3.1
Provision for income taxes 0.2 0.0 11.0 1.1
--- --- ---- ---

Net income $0.3 0.0% $19.5 2.0%
==== === ===== ===

Shares outstanding -
diluted 81.7 84.6

Earnings per share -
diluted $0.00 $0.23

Percentages may not add due to rounding.

JONES APPAREL GROUP, INC.
CONSOLIDATED OPERATING RESULTS
(UNAUDITED)

As required by the Securities and Exchange Commission Regulation G,
the following table contains information regarding the non-GAAP
adjustments used by the Company in the presentation of its financial
results:

All amounts in millions except per share data FIRST QUARTER
2009 2008
---- ----

Net income (as reported) $0.3 $19.5
Provision for income taxes 0.2 11.0
Items affecting segment income:
Impairment and other expenses related to
retail store closure plan (a) 22.6 -
Severance and other expenses related to
the exit of certain product lines and
other restructuring costs (b, c) 12.9 18.7
---- ----
Adjusted income before provision for taxes 36.0 49.2
Adjusted provision for income taxes 12.2 17.7
---- ----
Adjusted net income $23.8 $31.5
===== =====

Earnings per share - diluted (as reported) $- $0.23
Provision for income taxes - 0.13
Items affecting segment income:
Impairment and other expenses related to
retail store closure plan (a) 0.27 -
Severance and other expenses related to
the exit of certain product lines and other
restructuring costs (b, c) 0.15 0.22
---- ----
Adjusted income before provision for taxes 0.42 0.58
Adjusted provision for income taxes 0.14 0.21
---- ----
Adjusted earnings per share - diluted $0.28 $0.37
===== =====

Non-GAAP adjustments affecting revenue by segment:
Wholesale better apparel $- $-
Wholesale jeanswear (b, c) 1.6 6.9
Wholesale footwear and accessories - -
Retail - -
Licensing, other & eliminations - -
-- --
Total $1.6 $6.9
==== ====

Non-GAAP adjustments affecting income by segment:
Wholesale better apparel (c) $2.6 $(0.8)
Wholesale jeanswear (b, c) 5.4 16.4
Wholesale footwear and accessories (c) 4.1 1.9
Retail (a, c) 23.5 0.3
Licensing, other & eliminations (c) (0.1) 0.9
---- ---
Total $35.5 $18.7
===== =====

Adjusted segment margins
Wholesale better apparel 15.8% 15.8%
Wholesale jeanswear 9.8 9.1
Wholesale footwear and accessories 8.4 9.0
Retail (24.7) (15.4)
----- -----
Total 5.5% 6.0%
=== ===

(a) 2009 includes fixed asset impairment and other charges related to
the closure of underperforming retail locations announced in April
2009.

(b) 2009 and 2008 include costs related to the exit from certain
moderate sportswear lines announced in May 2007, the repositioning
of l.e.i. as an exclusive product for Walmart announced in February
2008, and other restructuring costs.

(c) 2009 and 2008 include severance, accelerated depreciation and other
restructuring costs.

JONES APPAREL GROUP, INC.
SEGMENT INFORMATION
(UNAUDITED)

All amounts in millions
Wholesale Wholesale
Better Wholesale Footwear &
Apparel Jeanswear Accessories
------- --------- -----------

For the fiscal quarter ended
April 4, 2009
Revenues from external
customers $291.8 $228.2 $218.4
Intersegment revenues 39.2 1.0 18.5
---- --- ----
Total revenues 331.0 229.2 236.9
----- ----- -----

Segment income (loss) $49.6 $17.3 $15.9
===== ===== =====
Segment margin 15.0% 7.5% 6.7%

Net interest expense
Equity in loss of
unconsolidated affiliate

Income before provision
for taxes

Segment revenues $331.0 $229.2 $236.9
Adjustments affecting
segment revenues - 1.6 -
-- --- --
Adjusted segment revenues $331.0 $230.8 $236.9
====== ====== ======

Segment income (loss) $49.6 $17.3 $15.9
Adjustments affecting
segment income 2.6 5.4 4.1
--- --- ---
Adjusted segment income (loss) $52.2 $22.7 $20.0
===== ===== =====
Adjusted segment margin 15.8% 9.8% 8.4%

For the fiscal quarter ended
April 5, 2008
Revenues from external
customers $331.5 $220.6 $252.5
Intersegment revenues 39.8 1.1 20.4
---- --- ----
Total revenues 371.3 221.7 272.9
----- ----- -----

Segment income (loss) $59.3 $4.4 $22.6
===== ==== =====
Segment margin 16.0% 2.0% 8.3%

Net interest expense
Gain on sale of interest
in Australian joint venture

Income before provision
for taxes

Segment revenues $371.3 $221.7 $272.9
Adjustments affecting
segment revenues - 6.9 -
-- --- --
Adjusted segment revenues $371.3 $228.6 $272.9
====== ====== ======

Segment income (loss) $59.3 $4.4 $22.6
Adjustments affecting
segment income (0.8) 16.4 1.9
---- ---- ---
Adjusted segment income (loss) $58.5 $20.8 $24.5
===== ===== =====
Adjusted segment margin 15.8% 9.1% 9.0%

Licensing,
Other &
Retail Eliminations Consolidated
------ ------------ ------------

For the fiscal quarter ended
April 4, 2009
Revenues from external
customers $141.2 $11.5 $891.1
Intersegment revenues - (58.7) -
-- ----- --
Total revenues 141.2 (47.2) 891.1
----- ----- -----

Segment income (loss) $(58.4) $(10.7) 13.7
====== ======
Segment margin (41.4%) 1.5%

Net interest expense (12.9)
Equity in loss of
unconsolidated affiliate (0.3)
----

Income before provision
for taxes $0.5
====

Segment revenues $141.2 $(47.2) $891.1
Adjustments affecting
segment revenues - - 1.6
-- -- ---
Adjusted segment revenues $141.2 $(47.2) $892.7
====== ====== ======

Segment income (loss) $(58.4) $(10.7) $13.7
Adjustments affecting
segment income 23.5 (0.1) 35.5
---- ---- ----
Adjusted segment income
(loss) $(34.9) $(10.8) $49.2
====== ====== =====
Adjusted segment margin (24.7%) 5.5%

For the fiscal quarter ended
April 5, 2008
Revenues from external
customers $158.9 $11.9 $975.4
Intersegment revenues - (61.3) -
-- ----- --
Total revenues 158.9 (49.4) 975.4
----- ----- -----

Segment income (loss) $(24.8) $(21.6) 39.9
====== ======
Segment margin (15.6%) 4.1%

Net interest expense (9.7)
Gain on sale of interest
in Australian joint venture 0.3
---

Income before provision
for taxes $30.5
=====

Segment revenues $158.9 $(49.4) $975.4
Adjustments affecting
segment revenues - - 6.9
-- -- ---
Adjusted segment revenues $158.9 $(49.4) $982.3
====== ====== ======

Segment income (loss) $(24.8) $(21.6) $39.9
Adjustments affecting
segment income 0.3 0.9 18.7
--- --- ----
Adjusted segment income
(loss) $(24.5) $(20.7) $58.6
====== ====== =====
Adjusted segment margin (15.4%) 6.0%

JONES APPAREL GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

All amounts in millions

April 4, 2009 April 5, 2008
------------- -------------
ASSETS

CURRENT ASSETS:
Cash and cash equivalents $194.3 $199.6
Accounts receivable 479.4 491.7
Inventories 473.9 464.6
Prepaid income taxes 11.7 6.7
Deferred taxes 29.6 30.4
Other current assets 47.4 51.3
---- ----
TOTAL CURRENT ASSETS 1,236.3 1,244.3

Property, plant and equipment,
at cost, less accumulated
depreciation and amortization 270.1 314.6
Goodwill 160.7 973.9
Other intangibles, less
accumulated amortization 590.3 617.4
Deferred taxes 15.5 -
Other assets 56.3 38.2
---- ----

$2,329.2 $3,188.4
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Short-term borrowings $9.0 $-
Current portion of long-term
debt and capital lease
obligations 252.9 4.6
Accounts payable 149.6 178.3
Income taxes payable - 21.1
Accrued expenses and other
current liabilities 109.5 132.7
----- -----
TOTAL CURRENT LIABILITIES 521.0 336.7
----- -----

NONCURRENT LIABILITIES:
Long-term debt and obligations
under capital leases 528.3 776.8
Deferred taxes - 4.0
Income taxes payable 21.2 -
Other 77.7 62.3
---- ----
TOTAL NONCURRENT LIABILITIES 627.2 843.1
----- -----
TOTAL LIABILITIES 1,148.2 1,179.8
------- -------

STOCKHOLDERS' EQUITY 1,181.0 2,008.6
------- -------

$2,329.2 $3,188.4
======== ========

JONES APPAREL GROUP, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)

All amounts in millions Fiscal Quarter Ended
--------------------
April 4, 2009 April 5, 2008
------------- -------------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $0.3 $19.5
---- -----

Adjustments to reconcile net income to net
cash used in operating activities:
Amortization of employee stock
options and restricted stock 4.2 6.9
Depreciation and other amortization 18.6 21.8
Impairments of property, plant and
equipment 20.4 -
Gain on sale of interest in
Australian joint venture - (0.3)
Equity in loss of unconsolidated
affiliate 0.3 -
Provision for losses on accounts
receivable 1.9 0.3
Deferred taxes (3.0) 8.6
Other items, net 0.6 (0.6)
Changes in operating assets and liabilities:
Accounts receivable (111.0) (155.3)
Inventories 35.4 59.3
Accounts payable (81.7) (45.0)
Income taxes payable/prepaid taxes 4.6 22.9
Other assets and liabilities, net (29.9) (4.4)
----- ----
Total adjustments (139.6) (85.8)
------ -----
Net cash used in operating activities (139.3) (66.3)
------ -----

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (8.3) (22.5)
Other - 0.3
-- ---
Net cash used in investing activities (8.3) (22.2)
---- -----

CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in short-term borrowings 9.0 -
Dividends paid (4.2) (12.0)
Principal payments on capitalized leases (0.9) (1.2)
---- ----
Net cash provided by (used in) financing
activities 3.9 (13.2)
--- -----

EFFECT OF EXCHANGE RATES ON CASH (0.3) (1.5)
---- ----

NET DECREASE IN CASH AND CASH EQUIVALENTS (144.0) (103.2)

CASH AND CASH EQUIVALENTS, BEGINNING 338.3 302.8
----- -----

CASH AND CASH EQUIVALENTS, ENDING $194.3 $199.6
====== ======

SOURCE Jones Apparel Group, Inc.

Investors, John T. McClain, Chief Financial Officer of Jones Apparel Group,
+1-212-642-3860; or Media, Joele Frank and Sharon Stern of Joele Frank,
Wilkinson Brimmer Katcher, +1-212-355-4449