Jones Apparel Group Inc. Reports Operating Results (10-Q)
Jones Apparel Group Inc. has a market cap of $1.68 billion; its shares were traded at around $19.52 with a P/E ratio of 13 and P/S ratio of 0.5. The dividend yield of Jones Apparel Group Inc. stocks is 1%.JNY is in the portfolios of Robert Olstein of Olstein Financial Alert Fund, David Dreman of Dreman Value Management, HOTCHKIS & WILEY of HOTCHKIS & WILEY Capital Management LLC, Richard Pzena of Pzena Investment Management LLC, Chuck Royce of Royce& Associates, Bruce Kovner of Caxton Associates, Louis Moore Bacon of Moore Capital Management, LP, Jim Simons of Renaissance Technologies LLC, Columbia Wanger of Columbia Wanger Asset Management, Steven Cohen of SAC Capital Advisors, Jeremy Grantham of GMO LLC.
Highlight of Business Operations: Retail revenues increased $5.2 million, primarily due to $13.1 million from the acquired Stuart Weitzman stores, a 2.5% increase in comparable store sales ($3.7 million) and a $0.5 million favorable effect of changes in exchange rates between the U.S. and Canadian Dollars, partially offset by operating fewer stores in the current period. Comparable stores are locations (including e-commerce sites) that have been open for a full year, are not scheduled to close in the current period and are not scheduled for an expansion or downsize by more than 25% or relocation to a different street or mall. A 25.4% increase in our comparable e-commerce business ($2.6 million) and a 1.5% increase in comparable store sales for our footwear stores ($1.3 million) were partially offset by a 0.6% decrease in comparable store sales for our apparel stores ($0.2 million). We began the current quarter with 880 retail locations, had a net decrease of 46 locations during the quarter to end the period with 834 locations, compared with 971 at the end of the prior period.
Wholesale better apparel SG&A expenses increased $4.6 million, primarily due to $2.1 million of costs related to our new Jessica Simpson jeanswear product line, a $1.6 million increase in marketing costs, a $1.5 million increase in occupancy costs, $0.6 million of expenses added as a result of the Moda acquisition, net of a $1.9 million favorable fair value adjustment of the related acquisition consideration payable and a $0.5 million unfavorable effect of changes in exchange rates between the U.S. and Canadian Dollars. These increases were offset by $1.7 million of other net cost decreases.
Wholesale footwear and accessories SG&A expenses increased $20.4 million, primarily due to a $15.4 million increase as a result of the SWH acquisition, a $2.5 million increase in compensation costs, a $2.1 million increase in severance costs and a $1.5 million increase in distribution costs due to increased shipments, offset by $1.1 million of other net cost decreases.
Retail SG&A expenses increased $6.0 million, primarily due to $10.4 million of costs related to the stores acquired in the SWH acquisition, a $3.3 million increase in asset impairment charges over the prior period, a $3.0 million increase in administrative costs, a $1.2 million increase in lease cancellation payments in the current period and $0.6 million of other net cost increases, partially offset by cost reductions of $8.6 million for occupancy and $3.9 million for compensation costs related primarily to operating fewer locations during the current period.
SG&A expenses for the licensing, other and eliminations segment increased $7.1 million, primarily due to a $2.9 million increase in amortization of share-based compensation, a $2.6 million impairment of an acquired license, a $0.7 million increase in other compensation-related costs and $0.9 million of other cost increases.
Net Interest Expense. Net interest expense increased $2.7 million, primarily the result of $5.4 million of interest recorded on the acquisition consideration liability in the current period, partially offset by a $1.2 million net favorable effect of our interest rate swaps and cap, a $1.0 million reduction in the amortization of fees related to our secured revolving credit line and $0.5 of other net interest reductions.
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