* Q2 EPS $0.29 ex-items vs. Street view $0.07
* Says "cautious" on outlook for rest of '09
* Says customers ordered "very conservatively" for H2
* To launch men's l.e.i. products at Wal-Mart
* Shares rise as much as 8.7 pct
(Adds comments from CEO, analysts, conference call, stock
By Dhanya Skariachan
BANGALORE, July 29 Jones Apparel Group Inc's
JNY.N quarterly profit beat estimates handsomely, boosted by
strong sales in its wholesale jeans segment and a surprise
profit in its retail business and sending shares up as much as
While the company's wholesale jeans business has gotten a
boost from a deal to sell its l.e.i. line at Wal-Mart Stores
Inc (WMT.N), its retail business improved mostly on its efforts
to prune its store base.
Jones said net income for the second quarter ended July 4
rose to $12.6 million, or 15 cents a share, from $10.5 million,
or 12 cents a share, a year earlier.
Excluding items, the company earned 29 cents a share. This
compares with analysts' expectation of 7 cents, according to
Revenue fell about 3 percent to $804 million, hurt by
declines in all divisions except wholesale jeans, where revenue
rose 28.5 percent.
The maker of Anne Klein and Jones New York clothing and
Nine West and Easy Spirit shoes posted an operating profit of
$3 million in its retail segment, down from $6 million a year
earlier. However, the results were lauded by many analysts, who
had expected a loss at retail.
Lazard Capital Markets analyst Todd Slater said he was
expecting the retail unit to post a loss of $11 million.
"Retail, the area of greatest consternation in the last two
years, drove the biggest swing," Slater wrote in a research
He said the feat was "all the more impressive" given very
cool and rainy weather that allowed consumers to put off buying
open-toed shoes and sandals, forcing stores to mark them down.
STRONG SALES AT WAL-MART
Jones sells its l.e.i. jeanswear line exclusively at
Wal-Mart, a deal that Standard & Poor's retail equities analyst
Marie Driscoll said helped margins.
In an interview with Reuters, Jones Chief Executive Officer
Wesley Card said the company plans to launch a men's collection
under the l.e.i. line at about 100 locations of the world's
largest retailer. [ID:nWNBB4890]
Despite the strong second-quarter results, Jones gave a
"cautious" outlook for the rest of 2009 citing conservative
orders from its customers for the back half, which includes the
all important holiday season.
Jones, however, added that the conservative orders could
translate into fewer promotions and thereby help boost margins
during the fall and holiday seasons.
The company trimmed the top end of its 2009 revenue
forecast to $3.35 billion from $3.50 billion, while keeping the
low end at $3.30 billion. It said expenses in the second half
of the year will not be down as much as they were in the first
Jones -- which has cut jobs, shuttered stores and managed
inventory tightly in a bid to reduce costs in the recession --
said it plans to close about 240 retail stores this year and
next. That compares with its earlier plan to close 225 stores.
It sees the accelerated closures improving profit by about
$4 million this year, $15 million next year and $21 million in
2011. Card told Reuters he did not see any major cost-cuts this
year beyond the announced initiatives.
Jones is also testing a new retail chain called ShoeWoo
that would sell many shoe brands and be larger than most of its
Jones shares rose to a high of $12.94, before surrendering
most of their gains to trade up 12 cents at $12.02 Wednesday
afternoon on the New York Stock Exchange.
(Reporting by Dhanya Skariachan in Bangalore; Editing by Lisa
Von Ahn, editing by Gerald E. McCormick)