The Jones Group reported a net loss of $1.2 million for the first quarter, compared with a profit of $25.7 million in the same period a year ago, but attributed this mainly to charges of $28 million and other costs of $9 million related to its acquisition of a major stake in Stuart Weitzman last year. Excluding these and other extraordinary costs, adjusted net income declined to $24 million from $32 million.
The group's total sales fell by 2.6 percent to $936 million over the period, but operating earnings dropped to $53 million from $63 million. On the other hand, the acquisition of Kurt Geiger in the U.K. by the American group helped to lift its gross margin to 36.7 percent from $34.4 percent over the same period.
In contrast with most other segments, the group's domestic wholesale footwear and accessories operations improved sales and earnings, which were up to $226 million and $20 million, respectively. Domestic retail sales declined to $128 million and generated a loss of $21 million. International wholesale operations saw a reduced turnover of $73 million, but their profits rose to $10 million. International retail booked a loss of $3 million, up from $2 million in the year-ago period, accompanying a big jump in revenues to $78 million from $10 million.
The management is encouraged by the generally rising consumer confidence and positive retail trends in the U.S., but points out that the economic environment still contains mixed signals. Consumer spending remains unpredictable.
The company is projecting total sales of between $3.8 billion and $3.93 billion for the full financial year. Out of that, Nine West should contribute 22 percent of sales, Stuart Weitzman and Anne Klein 7 percent each, Easy Spirit 6 percent, and Bandolino 4 percent. An estimated 21 percent of total sales should come from outside the U.S., up from 10 percent in 2010 and 17 percent in 2011.
Having refocused itself from category management to brand management, Jones is intent on revitalizing core brands such as Jones New York, Nine West, Anne Klein and Easy Spirit. While investing in Stuart Weitzman, Kurt Geiger, B. Brian Atwood and other recent acquisitions, it continues to close unprofitable stores and trying to optimize assortments and customer experience in the remaining locations.