* To cut 18 pct of U.S. retail staff
* Estimates first-quarter EPS of about $0.15 vs est $0.25
* Estimates first-quarter sales of about $1 bln vs est
* Shares rise 2.7 percent
April 24 Jones Group Inc, the fashion
company that owns retail chains Nine West and Jones New York,
said it will close about 170 underperforming U.S. stores by
mid-2014 and cut its workforce by about 8 percent in a bid to
Shares of the company rose 2.7 percent to $13.97 on the New
York Stock Exchange after it announced the cuts, which it said
would cost it about $40 million to $60 million over the next 15
Jones' U.S. stores have struggled in the face of aggressive
competition. Sales during the all-important holiday season fell
about 7 percent.
Earlier this year, activist hedge fund firm Barington
Capital Group, run by James Mitarotonda, met with Jones Group
management and suggested the company cut expenses and focus on
its most successful brands, while possibly selling other brands.
In the past, Barington has invested in several retailers,
including Dillard's Inc and Warnaco, and pushed for
operational and strategic changes. PVH Corp acquired
Warnaco in February.
"Barington has been pushing for an in-depth review of the
Jones brands and even a culling of some brands," said Damien
Park, managing partner at Hedge Fund Solutions, a research and
consulting firm focused on shareholder activism. "That was
missing in today's announcement."
Barington typically seeks a seat on the boards of many
companies in which it invests, Park added.
"Given their past record, it's highly likely they won't rest
until they get board representation," he said.
A representative at Barington declined to comment. A Jones
Group spokeswoman confirmed that the company met with Barington
but declined to comment further.
Jones Group shares are up 23 percent so far this year.
The company estimated first-quarter adjusted earnings of
about 15 cents per share, shy of Wall Street expectations for a
profit of 25 cents a share. It estimated first-quarter revenue
at about $1 billion.
First-quarter gross margins are estimated to fall 90 basis
points below the company's own forecasts as a highly promotional
environment and an unusually cold weather hurt sales.
Jones said it will cut U.S. retail staff by about 18 percent
and corporate, support and supply chain staff by about 2
The company said upon completion of the restructuring plan,
it expects outlet stores comprising a significantly higher
percentage of its overall retail locations.
The company is now betting on its wholesale division, where
sales to chains like Macy's Inc and Nordstrom Inc
contribute about half its revenue.
Jones said it will streamline the wholesale business to
focus more on sportswear and also consolidate some distribution
and supply chain facilities.
The restructuring is already underway and includes 50 store
closures announced in the fourth quarter of 2012, Jones said.
Jones had a total of 594 domestic retail stores at the end
of 2012, which include 409 outlet stores. The company had about
6,250 full-time employees and about 5,540 part-time employees as
of December 31, according to a regulatory filing.