The Jones Group Inc. (ticker: JNY, exchange: New York Stock Exchange (.N))
News Release -
Jones Apparel Group, Inc. Consolidates and Rebrands Certain Operations
NEW YORK, Jan. 16 /PRNewswire-FirstCall/ -- Jones Apparel Group, Inc.
(NYSE: JNY) announced that it will record pre-tax charges totaling
$25.5 million, or $.11 per share, in the fourth quarter 2002 (of which
$21.9 million, or $.10 per share, is non-cash) to consolidate and rebrand
certain businesses discussed below. Excluding these charges, the Company
reaffirmed its previous earnings per share guidance of $.48 to $.50 for the
fourth quarter 2002 ended December 31, 2002, as compared to $.36 for the
fourth quarter 2001 (adjusted for goodwill and trademark amortization that
ceased with the adoption of SFAS No. 142). The Company will provide a full
earnings report on Wednesday, February 5, 2003.
Peter Boneparth, President and Chief Executive Officer, stated, "Our
continued focus is to improve upon our efficient operating model in order to
better support future expansion through both internal growth and acquisitions.
By improving productivity in two business units, the actions we are announcing
today will help us to accomplish this goal."
First, the Company will close certain Sun Apparel manufacturing production
facilities located in Torreon, Mexico and certain warehousing and
administrative facilities located in El Paso, Texas, and will also eliminate
certain jobs, which will be absorbed by existing l.e.i. production facilities.
In accordance with EITF Issue No. 94-3, "Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity," the
Company will record $6.9 million in expenses, or $.03 per share, to account
for the writedown of facilities and severance benefits, evenly divided between
cash and non-cash.
Mr. Boneparth said, "When we acquired R.S.V. Sport, Inc. (principally the
l.e.i. brand) in August 2002, we recognized that Mel Geliebter, its CEO,
would provide immeasurable leadership relating to manufacturing process
improvements, and accordingly named him CEO of the existing Sun Apparel
Manufacturing Division. After a few short months on the job, Mel and his team
have performed a thorough review of the operations which will result in a more
productive use of resources."
Second, the Company will rebrand 20 of its 47 retail stores operating
under the Enzo Angiolini brand name. These stores have not achieved the
Company's return on investment goal. As a result, they will be converted to a
retail footwear concept operating under the Company's more moderately priced
Bandolino brand name. The remaining 27 store locations will continue to be
evaluated. These changes will not affect the Enzo Angiolini wholesale
business, which has been noting improved holiday and early spring selling
results. This move will also provide the Enzo Angiolini product team with more
time to focus on product innovations to increase the brand's consumer
audience. This rebranding will result in a non-cash writedown of the Enzo
Angiolini trademark as described below.
"Bandolino, a moderate branded concept, has been very successful since its
2000 footwear relaunch," stated Rhonda Brown, President and CEO, Footwear,
Accessories and Retail Group. "We believe it is a strong brand capable of
operating in a dual distribution format and should provide us with operating
margins and a return on investment consistent with our corporate objectives.
The forthcoming launch of Bandolino apparel in Fall 2003 may also provide
additional product opportunities in a number of the store locations."
The Company has performed its annual valuation of Goodwill and Trademarks
in accordance with SFAS No. 142 "Accounting for Goodwill and Certain Long-
Lived Intangibles." The results of the annual impairment test of the
Company's brands will result in a non-cash writedown of trademarks totaling
$18.6 million, or $.08 per share, which represents less than 1% of total
intangibles and goodwill, which will be recorded in the fourth quarter. The
impact of the Enzo Angiolini retail conversion represents $13.5 million, or
$.06 per share, of the writedown.
The Company will host a conference call with management to discuss the
consolidation and rebranding of operations at 9:00 a.m. EST today, which is
accessible by dialing 212-896-6166 or through a webcast at www.jny.com.
Jones Apparel Group, Inc. (www.jny.com), a Fortune 500 Company, 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, Gloria Vanderbilt, Erika, l.e.i., 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, and footwear and accessories under the ESPRIT brand
licensed from Esprit Europe, B.V. 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
2001 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.
SOURCE Jones Apparel Group, Inc.