NEW YORK, Aug. 1 /PRNewswire/ -- Jones Apparel Group, Inc. (NYSE: JNY) today announced revenues and earnings for the quarter ended July 7, 2001.

Total revenues for the quarter totaled $880 million, as compared to $907 million reported for the second quarter of 2000. This represents a 7% increase, exclusive of discontinued businesses, which largely represents retail stores which were closed and international businesses which were divested as part of the Nine West retail business restructuring during 2000. Net income increased 8% to $60.1 million (excluding a non-cash after-tax charge of $4.7 million related to a purchase accounting adjustment to bring the McNaughton Apparel Group and Judith Jack inventories to fair market value) in comparison to $55.5 million for second quarter of 2000. Earnings per share for the second quarter increased to $.47 (excluding the non-cash charge of $.04), as compared to $.46 for the second quarter of 2000.

Sidney Kimmel, Chairman, commented, "Our earnings per share were slightly below our previous expectations, as we were impacted by a very difficult retail environment, especially toward the end of the quarter, and the prevailing weakness in the footwear industry. The retail and wholesale footwear and accessories segments of our business felt the impact of these macroeconomic and industry conditions. We were, however, very pleased with the wholesale apparel segment, as it outperformed our expectations during this sluggish environment."

Mr. Kimmel continued, "Recognizing that the uncertain economic conditions which have impacted the national retail environment may well continue into the second half of 2001, we believe it is prudent to maintain a cautious outlook for our businesses. This conservatism should enable us to maximize cash flow and insulate us from inventory risk. We believe this strategy will position us to take full advantage of market opportunities as the economy begins to rebound. As a result, we are revising our earnings per share guidance for the full year to a range of $2.70 to $2.80, an increase of 8% to 12% over $2.49 reported in 2000. (This guidance excludes a non-cash charge of $.08 for the full year related to the purchase accounting adjustment discussed above). We remain confident that we will achieve our previous free cash flow target of over $350 million and reach a debt to total capitalization ratio target of 38% to 40% at year end 2001."

Mr. Kimmel further explained, "Our brands and products hold commanding positions in numerous markets, and provide investment dressing to multiple groups of consumers across various shopping channels. This quality to value relationship remains the primary focus of the Jones Apparel management team. In addition, the fiscal controls, which are inherent in our infrastructure, continue to benefit us during this period of economic uncertainty. By managing the delicate balance between product and fiscal prudence and combining it with our industry leadership, we believe that we can take advantage of market opportunities as the economy strengthens."

Mr. Kimmel concluded, "We feel very positive about the strategic moves we are making to navigate through the remainder of 2001 and beyond. We believe that we have one of the strongest management teams in the industry to effectively progress beyond this year and capitalize on the current economic slowdown as we continue forward. Looking into 2002, we believe that earnings per share will fall within a range of $3.40 to $3.45, eliminating amortization of goodwill and certain intangibles, as required under SFAS No. 142 beginning on January 1, 2002. This compares to a cash proforma earnings per share range of $3.00 to $3.10 for 2001."

Mr. Kimmel added, "We are also pleased to announce the addition of Matthew Kamens to our Board of Directors. Mr. Kamens was a partner with the law firm of Wolf, Block, Schorr and Solis-Cohen LLP, most recently serving as the Chairman of the Executive Committee. We welcome Mr. Kamens and look forward to his contributions to Jones Apparel Group."

Jones Apparel Group, Inc. (www.jny.com) is a leading designer and marketer of branded apparel, footwear and accessories. The Company's nationally recognized brands include: Jones New York; Lauren by Ralph Lauren, Ralph by Ralph Lauren, and Polo Jeans Company, which are licensed from Polo Ralph Lauren Corporation; Evan-Picone, Rena Rowan, Norton McNaughton, Erika, Energie, Currants, Jamie Scott, Todd Oldham, Nine West, Easy Spirit, Enzo Angiolini, Bandolino, Napier and Judith Jack. The Company also markets costume jewelry under the Tommy Hilfiger brand licensed from Tommy Hilfiger Corporation and the Givenchy brand licensed from Givenchy Corporation. Celebrating more than 30 years of service, the Company has built a reputation for excellence in product quality and value, and in operational execution.

Certain statements herein are "forward-looking statements" made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements represent the Company's expectations or beliefs concerning future events that involve risks and uncertainties, including the strength of the economy and the overall level of consumer spending, the performance of the Company's products within the prevailing retail environment, and other factors which are set forth in the Company's 2000 Form 10-K and in all filings with the SEC made by the Company subsequent to the filing of the Form 10-K. The Company does not undertake to publicly update or revise its forward-looking statements as a result of new information, future events or otherwise.

                          JONES APPAREL GROUP, INC.
                        CONSOLIDATED OPERATING RESULTS
                                 (UNAUDITED)

                all amounts in millions except per share data

                               Fiscal Quarter Ended   Fiscal Six Months Ended
                                July 7,      July 2,     July 7,    July 2,
                                 2001          2000       2001       2000

    Total revenues                $880         $907       $1,951     $1,989

    Cost of goods sold             525          528        1,155      1,172

    Gross profit before
     purchase accounting
     adjustments                   355          379          796        817

    Purchase accounting
     adjustments*                    8            0            8          0

    Gross profit                   347          379          788        817

    SG&A expenses                  225          252          476        537

    Amortization of goodwill        10            9           20         18

    Operating income               112          118          292        262

    Net interest expense            20           25           41         52

    Income before taxes             92           93          251        210

    Provision for income taxes      37           37           99         84

    Net income                     $55          $56         $152       $126


    Diluted earnings per share
     excluding purchase
     accounting adjustments to
     cost of goods sold          $0.47        $0.46        $1.21      $1.04

    Diluted earnings per share   $0.43        $0.46        $1.18      $1.04

    Diluted shares outstanding     134          122          132        122

     * - Reflects an increase in cost of goods sold attributable to the fair
         value of inventory over cost, recorded as a result of the
         acquisitions of Judith Jack and McNaughton.


                          JONES APPAREL GROUP, INC.
                         CONSOLIDATED BALANCE SHEETS
                                 (UNAUDITED)

                           all amounts in millions

                                                    July 7,       July 2,
                                                      2001         2000
    ASSETS

    CURRENT:
      Cash and cash equivalents                        $37          $55
      Accounts receivable, net of allowance of
       $14 for doubtful accounts for both periods      531          428
      Inventories                                      770          591
      Other current assets                             175          149
         TOTAL CURRENT ASSETS                        1,513        1,223

    Property, plant and equipment, at cost, less
     accumulated depreciation and amortization         237          231
    Goodwill, less accumulated amortization          1,374        1,066
    Other intangibles, less accumulated
     amortization                                      545          346
    Other assets                                        99          107

                                                    $3,768       $2,973


    LIABILITIES AND STOCKHOLDERS' EQUITY

    CURRENT:
      Short-term borrowings and current portion
       of long-term debt and capital lease
       obligations                                    $517         $436
      Accounts payable                                 216          203
      Accrued expenses and other current
       liabilities                                     156          168
         TOTAL CURRENT LIABILITIES                     889          807

    NONCURRENT LIABILITIES:
      Long-term debt and obligation under
       capital leases                                  965          840
      Other                                            113           47
         TOTAL NONCURRENT LIABILITIES                1,078          887
         TOTAL LIABILITIES                           1,967        1,694

    STOCKHOLDERS' EQUITY                             1,801        1,279

                                                    $3,768       $2,973


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SOURCE Jones Apparel Group, Inc.
Web site: http: //www.jny.com
CONTACT: Wesley R. Card, Chief Financial Officer, or Anita Britt, Senior Vice President, Finance and Investor Relations, of Jones Apparel Group, +1-215-785-4000