* Q3 EPS 46 cents ex-items tops Street view of 27 cents
* Sales fall 11 pct to $855.7 mln, below Street view
* Sees improved industry margins for the holidays
* Shares down nearly 6 pct
(Adds analysts' comments, 4th qtr outlook)
By Martinne Geller
NEW YORK, Oct 28 Jones Apparel Group Inc
JNY.N reported lower-than-expected quarterly revenue on
Wednesday, hurt by the closure of dozens of stores and falling
sales at those that remain open, and its shares dropped nearly
The owner of the Nine West and Jones New York brands also
tightened its 2009 revenue forecast and said it was cautiously
optimistic the upcoming holiday shopping season would enhance
financial results across the industry.
Jones now expects revenue of $3.31 billion to $3.34 billion
this year, compared with a prior forecast for $3.30 billion to
$3.35 billion. It expects same-store sales in the fourth
quarter to range from down 2.5 percent to up 2.5 percent.
Chief Executive Wesley Card said he was confident margins
would improve industrywide during the key holiday season as
consumers seem to be buying without the need for steep
markdowns that ravaged profits last year.
"We're cautiously optimistic about trends in the fourth
quarter, but we have to see how the consumer reacts," Card said
in an interview. "So far they've been buying against less
markdowns. So it's encouraging, but it's still relatively
Jones, whose brands also include Enzo Angiolini and Anne
Klein, said it has closed 69 locations and remains on track to
eliminate 265 more by the end of 2010. That is up from its
prior plan to close about 240 stores.
Morgan Stanley analyst Chi Lee said he thinks Jones will
beat Wall Street's current profit estimates next year, since it
should benefit from opportunities to restock store shelves that
have been kept light, the exit of the Liz Claiborne LIZ.N
brand from stores such as Macy's Inc (M.N) and margin
improvements in the retail business.
Lee reiterated his "overweight" rating on the shares.
REVENUE MISSES ON SALES DECLINES
Net income in the third quarter was $30.4 million, or 36
cents per share, up from $27.3 million, or 33 cents per share,
a year earlier.
Excluding one-time items, the company earned 46 cents per
share, handily topping analysts' average estimate of 27 cents,
according to Thomson Reuters I/B/E/S.
Revenue fell 11 percent to $855.7 million, below Wall
Street expectations of $867.3 million.
The company said sales at its retail stores open at least a
year were down, as anticipated, consistent with the overall
retail environment, which has suffered as consumers rein in
their discretionary spending.
Jones' overall same-store sales fell about 3 percent, hurt
by an 11 percent decline at its mall-based shoe stores, which
include Nine West and Easy Spirit. Its outlet stores saw a 1
The company said its inventories were down 24 percent from
the prior year.
It expects cost savings from store closures to lift results
by $4 million in 2009, $16 million in 2010 and $22 million in
2011, up slightly from its earlier forecast.
Doug Conn, a credit analyst with Hexagon Securities, said
he was encouraged that the company's debt level has been coming
down, in a trend he expects to continue if the company can
deliver on its expectations.
Jones shares were down 5.8 percent at $16.67 in afternoon
trade on the New York Stock Exchange. The Standard & Poor's 500
Index .SPX was off 1 percent.
(Reporting by Martinne Geller; Editing by Derek Caney, Maureen
Bavdek, Tim Dobbyn)