JONES GROUP INC. $14 (New York symbol JNY; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 79.7 million; Market cap: $1.1 billion; Price-to-sales ratio: 0.3; Dividend yield: 1.4%; TSINetwork Rating: Average; www.jonesgroupinc.com) designs clothing, accessories and footwear for men and women. Its major brands include Jones New York, Gloria Vanderbilt, Rachel Roy, Anne Klein and Nine West. Jones sells its products through department stores and 543 company-owned outlets.
In the three months ended October 5, 2013, Jones’s sales fell 1.3%, to $1.02 billion from $1.03 billion a year earlier. Weaker-than-expected back-to-school sales forced many of Jones’s U.S. department store clients to cut their prices to clear unsold merchandise.
Earnings fell 17.0%, to $35.6 million from $42.9 million. Due to fewer shares outstanding, earnings per share declined 15.8%, to $0.48 from $0.57.
These figures exclude costs related to an ongoing restructuring plan, which mainly involves closing 170 stores. So far, Jones has closed 66 outlets and expects to close 62 more over the next few months. It is still negotiating to end the leases on the remaining 42 locations.
These moves will cost the company $40 million to $50 million. However, the plan should cut its annual costs by $40 million. Jones should realize $15 million of these savings in 2013.
The stock rose as high as $18 in August 2013 on speculation that the company was looking to sell itself. However, a lack of acceptable offers has pushed the shares down to their current level. They now trade at a somewhat high 17.7 times the $0.79 a share that Jones will probably earn in 2013. The company continues to pay quarterly dividends of $0.05 a share. The annual rate of $0.20 yields 1.4%.
Jones Group is a hold.
