Jones Apparel Group, the American company which owns Nine West, Maxwell Shoe and other shoe-related wholesale and retail operations, has reported a decline in the operating margin of is wholesale footwear and accessories segment for the last year to 13.9 percent of sales from 15.5 percent in the previous year, but it remained higher than those obtained in its apparel operations. The revenues from the segment declined slightly to $1,020.1 million from $1,060.7 million.
In the 4th quarter, however, segment sales were still down to $240.9 million from $252.3 million in the year-ago period, but the operating margin improved to 11.0 percent from 10.6 percent. Furthermore, the group’s management noted a 2.8 percent increase on a same-store basis in the quarter for its footwear and ready-to-wear stores, which reduced to 0.2 percent the same-store decline for the full year. Barneys, the recently acquired chain of luxury stores, posted comparable store gains of 8.0 percent for the quarter and 10.8 percent for the year.
Peter Boneparth, president and chief executive of Jones Apparel, said the group continues to explore other vertical retail opportunities and to open new store locations under new concepts. It will introduce a chain of accessories stores during 2006. The recent growth of its own retail operations reduced last year its reliance on its largest wholesale customer, Federated Department Stores, to 19 percent of gross sales from 26 percent in 2004. The group is also reacting to the recent consolidation of Federated and May Department Stores by introducing new processes that are supposed to generate cost savings of about $30 million in 2006, such as the adoption of the SAP Apparel and Footwear Solution.
The group’s net profit declined last year to $274.3 million from $301.8 million. While total revenues increased to $5,014.6 million from $4,592.6 million, the gross margin fell by 90 basis points to 36.1 percent. Last Feb. 6, Jones announced the sale of its big Polo Jeans business to Polo Ralph Lauren for $255 million. Following the disposal, the group is now predicting flat or higher adjusted earnings per shares this year on lower total revenues of $4.65-4.75 billion.