The uncertain macroeconomic environment and a disappointing holiday season in the USA affected the results of Jones Apparel Group, parent company of Nine West and numerous other footwear retail and wholesale operations. On a comparable basis, sales fell by 4.8 percent during the 4th quarter ended Dec. 31 in the group’s 1,000-odd stores, two-thirds of which carry footwear.
The revenues of the group’s wholesale footwear and accessories division dropped by 8.6 percent in the quarter to $242.6 million, and their operating margin declined to 6.9 percent - or 7.1 percent on an adjusted basis – from 8.1 percent in the same period a year earlier. The group’s apparel operations incurred losses.
Total sales at Jones slipped by 16.7 percent in the latest quarter to $839 million, due in part to the sale of Barneys New York and the disposal of various sportswear lines. The net loss was reduced to $89.8 million for the quarter, compared with a loss of $269.5 million in the year-ago period.
For the year, the footwear and accessories segment raised its sales to $1,028.4 million, up from $941.1 million in 2006, and improved its operating margin to 10.6 percent from 9.7 percent. Total group revenues were down by 5.8 percent to $3.79 billion, but the company made a net profit of $311.1 million, compared with a loss of $144.1 million the year before. The group’s gross margin declined to 32.2 percent from 34.6 percent, but operating losses were cut to $27.0 million. Restructuring charges were offset by capital gains on the sale of Barneys last September to Istithmar of Dubai for $945 million in cash and on other items such as the sale of Jones’ stake in the Nine West Australia joint venture last December.
Reflecting the challenging conditions in the mainstream segment of the U.S. retail market, many other American footwear retailers saw comparable store sales slide in the final quarter of the latest fiscal year, including Bakers Footwear Group, DSW and Shoe Carnival.
At Bakers, same-store sales fell by 6.8 percent on top of a 13.8 percent decline in the year-ago period. Net sales dropped by 11 percent to $54.7 million in the three-month period. DSW posted a 1.7 percent decline in same-store sales for its 4th quarter, ended Feb. 3, with net revenues more or less stable at $332.5 million. Shoe Carnival had a more important decline, with comparative sales falling 5.7 percent for the quarter ended Feb. 2. Net sales dropped by 7 percent to $164.3 million at this discount-oriented chain.
The general outlook for the retail sector was bleak during the first month of the new calendar year, but not as bad as expected. According to the calculations of WWD, the American fashion daily, a staggering decline of around 20 percent in the department stores was slightly tempered by 6 percent growth in specialty stores.
Consumers seem to be spending only on necessary items, so winter boots did well during the month of January because of low temperatures in most states. Mass merchants in the country saw a 2.2 percent growth on a same-store basis, although leaders such as Wal-Mart or Target missed expectations with an increase of 0.2 percent and a drop of 1.1 percent, respectively.