Jones Group suffered an operating loss of $2.4 million on revenues of $188.4 million in its redefined domestic wholesale footwear and accessories division during the second quarter ended July 2. But it achieved positive operating margins of 2.9 percent on sales of $166.5 million in its domestic retail operations, 6.6 percent on sales of $53.4 million in international retail and 12.4 percent on $76.6 million in international wholesale.
Comparatively, in the same period a year ago the group had booked a profit of $12.9 million on revenues of $193.6 million in domestic wholesale footwear and accessories. Its domestic retail operations had generated a margin of 0.7 percent on sales of $165.0 million. Outside the U.S., retail had scored a 24.8 percent margin on sales of $12.5 million, while wholesale had generated a 10.4 percent margin on revenues of $69.3 million.
The parent company of Nine West decided to add two new segments for its revenues outside the U.S. following its acquisition of Stuart Weitzmann last year and Kurt Geiger a few weeks ago. The management pointed out that the Weitzmann brand has performed exceptionally well, experiencing strong growth in the U.S. and abroad.
Overall, the group's total revenues grew by only 3.2 percent to $887.4 million in the quarter, indicating a slowdown after the 8.3 percent increase achieved in the first quarter. The group's gross margin came down to 36.4 percent from 36.9 percent, and the operating margin was reduced to 5.1 percent from 6.4 percent. Net income declined to $5.2 million from $25.7 million, after extraordinary charges that rose to $23 million from $12 million, mainly in relation to Weitzmann's acquisition.
For the first six months of this year, the group's net profit declined by 51.5 percent to $30 million on 5.8 percent higher revenues of $1.75 billion. The acquisition of Kurt Geiger did not prevent the group from ending the period with $146 million in cash, without drawing on its revolving credit line. Expressing cautious optimism about the retail environment in the second half, the management said it will continue to focus on inventory management and control of expenses.
The group found little resistance by consumers to the moderate price increases charged by the company during the first half of this year, but the management noted that these increases will become more pronounced in the second half.