* Q1 adj EPS 28 cts tops Wall Street view of 10 cts
* Revenue fell 8.6 percent
* Sees closing 225 stores in 2009-2010
* Trims ‘09 sales forecast
* Shares up 14.6 pct (Adds CEO comments, details, updates stock activity)
By Martinne Geller
NEW YORK, April 29 (Reuters) - Jones Apparel Group Inc JNY.N reported a higher-than-expected quarterly profit on Wednesday, helped by cost cuts and higher sales in its wholesale jeans business, and its shares rose nearly 15 percent.
The owner of the Jones New York, Nine West and Anne Klein brands also lowered the top end of its 2009 sales forecast and said it plans to close about 225 retail stores this year and next, in a plan it expects to improve profit by $3 million this year, $14 million next year and $20 million in 2011. About 60 percent of the closings will be in malls.
Those closures will take place across the company’s retail concepts, which also include Easy Spirit and Enzo Angiolini. About 700 to 1,000 people will lose their jobs, Chief Executive Wesley Card said in an interview.
In addition to job cuts announced last year, Jones said it laid off 375 workers in the first quarter. Those cuts are expected to result in annual savings of about $20 million, including about $13 million this year.
Card said the company was not abandoning its retail strategy, but modifying it as the recession has made it more difficult to manage a lot of small, one-brand stores. He said Jones was leaning more toward larger, multi-brand stores, such as the ShoeWoo concept it is currently testing. Jones expects to end 2009 with more than 800 locations. [ID:nN29397502]
Net income was $300,000, or nil per share, in the first quarter ended April 4, down from $19.5 million, or 23 cents per share, a year earlier.
Excluding one-time items, the company earned 28 cents per share, easily topping analysts’ average estimate of 10 cents according to Reuters Estimates.
The strong profit helped drive up shares of apparel companies as the Dow Jones U.S. Apparel Retailers index .DJUSRA was up 1.3 percent in early afternoon.
Like all clothing and accessories vendors, Jones Apparel has seen orders shrink from retailers trying to keep their inventories slim in the recession.
Revenue fell 8.6 percent to $891 million as sales declined across all segments except the wholesale jeans business. Analysts had expected $875 million.
“The wild card here is how the consumers are going to react and how long they’re going to hold out for price in the back half of the year,” Card told analysts on a conference call.
He said demand for women’s apparel remains soft, footwear is heavily affected by promotions, and accessories and costume jewelry remain difficult categories. However, sales of jeans have been good.
The company, which sells its l.e.i. jeans exclusively at Wal-Mart Stores Inc (WMT.N), said revenue in its wholesale jeans business rose 3.4 percent. Other wholesale businesses were pressured in part by reduced orders.
Sales at the company’s own stores open at least a year fell 10.6 percent and Jones said it was planning for same-store sales to be flat to down 5 percent this year after falling 4 percent in 2008.
The company now expects 2009 revenue of $3.3 billion to $3.5 billion, versus a prior forecast of $3.3 billion to $3.54 billion. For the second quarter, it expects revenue to decline 5 to 8 percent.
Card said that business in April was “on the same track” as it was in March, when many retailers reported same-store sales that topped expectations.
Jones shares were up $1.18 or 14.6 percent at $9.24 on the New York Stock Exchange, off an earlier high at $9.33, on Wednesday afternoon. (Additional reporting by Ben Klayman in Chicago; Editing by Lisa Von Ahn, Gerald E. McCormick and Matthew Lewis)