Jones’cost cuts mask weak sales

Article Excerpt

JONES APPAREL GROUP INC. $16 (New York symbol JNY; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 85.4 million; Market cap: $1.4 billion; Price-to-sales ratio: 0.4; WSSF Rating: Average) gets about half of its sales by selling its clothing through department stores. In the second quarter of 2009, Jones’ sales fell 3.1%, to $803.9 million from $829.4 million a year earlier. However, earnings rose 41.2%, to $23.3 million, or $0.29 a share, from $16.5 million, or $0.20 a share. These figures exclude the cost of closing some stores and severance. The company plans to close 240 of its 370 stores over the next two years. Most of these small outlets are in less-popular malls. This should save Jones $4 million this year, $15 million next year and $21 million in 2011. However, the stock could suffer if the current recovery stalls. Jones Apparel Group is a hold. hold…