The Jones Group Inc. Announces Strategic Plan To Improve Profitability

    The Jones Group Inc. Announces Strategic Plan To Improve Profitability


PR Newswire

NEW YORK, April 24, 2013

NEW YORK, April 24, 2013 /PRNewswire/ --The Jones Group Inc. ("Jones Group,"
the "Company") (NYSE: JNY) today announced a series of actions designed to
improve profitability. The Jones Group is committed to improving its
direct-to-consumer business, achieving operational excellence and enhancing
profitability through strong cost discipline and careful inventory planning.
Accordingly, the Company's plan will reset its domestic retail business
through the reduction of approximately 170 underperforming stores and will
streamline certain wholesale divisions and the supply chain.

Wesley R. Card, The Jones Group Chief Executive Officer, commented: "We are
focused on significantly improving margins in both the retail and wholesale
channels and delivering outstanding products. In early 2013, we marketed a
refocused sportswear product offering for fall 2013, which we believe will
resonate with our core Jones New York customers. Given the impact it will
have on our associates, our decision to streamline operations was difficult.
However, we believe these actions will position the Company for maximum
operating leverage and improved profitability as our businesses recover and

"We remain focused on our mission to create the leading global fashion company
defined by premier brands and driven by exceptional talent, and have achieved
success in diversifying our portfolio from a category, geographic and
distribution perspective," Card continued.

Actions to improve profitability include:

  oClosing approximately 170 underperforming domestic retail stores by
    mid-2014. This plan is already underway and includes the 50 store
    closings announced in the fourth quarter of 2012. Upon completion, The
    Jones Group expects to operate a smaller and more productive chain of
    domestic stores, with outlet stores comprising a significantly higher
    percentage of the overall retail portfolio.
  oContinuing critical assessment of individual store profitability on an
    ongoing basis, including consideration of converting certain stores to
    brands that offer the greatest opportunity for revenue growth and
  oOptimizing the wholesale channel, with a focus on sportswear, through a
    more streamlined structure to support a brand-focused organization,
    including the consolidation of certain production, design and selling
    divisions, and consolidation of distribution and supply chain facilities.
  oReducing domestic retail staff by approximately 18% and corporate, support
    and supply chain staff by approximately 2%, for a total headcount
    reduction of approximately 8% upon completion. Retail staff reductions and
    termination notifications began this month and will continue through the
    first half of 2014. 

These actions are expected to generate approximately $40 million in annualized
pre-tax savings and reduction of operating losses by mid-2014, with the
benefit to fiscal 2013 expected to total approximately $11 million. Savings
will be generated through the reduction of the Company's workforce and other
selling, general and administrative expenses to reflect the Company's smaller
domestic retail footprint and more streamlined operations.

The Company expects to incur costs of approximately $40 million to $60 million
over the next 15 months to achieve the plan. The costs to be incurred relate
primarily to severance, store closures and non-cash asset write-downs
(approximately $6 million). 

Preliminary First Quarter Results
The Company today also announced that it expects to report 2013 first quarter
adjusted earnings per share ("EPS") of approximately $0.15, compared with 2012
first quarter adjusted EPS of $0.31. Included in the results will be charges
totaling approximately $0.05 per share related to changes in foreign currency
exchange, primarily pertaining to the British pound. The adjusted results
exclude charges related to impairments of assets, the impact of severance and
other costs related to restructuring activities, certain acquisition-related
costs and other costs not considered relevant for period-over-period
comparisons (see reconciliation of adjusted earnings in the accompanying
schedule). As reported under generally accepted accounting principles
("GAAP"), the Company expects to report 2013 first quarter EPS of
approximately $0.01, compared with a 2012 first quarter loss per share of

The Company expects to report 2013 first quarter adjusted and GAAP revenues of
approximately $1 billion, compared with 2012 first quarter adjusted and GAAP
revenues of $936 million.

Card commented: "First quarter revenues were in line with our expectations,
with the exception of our sportswear business and retail channel, which
remained challenged and highly promotional. This resulted in a higher than
anticipated level of markdowns during the quarter for our wholesale customers,
and deeper promotions required in our own retail doors. Additionally, the
unusually cold weather in the first quarter had an impact on sales of seasonal
products. As a result, we expect gross margins for the first quarter of 2013
to be approximately 90 basis points below our estimates. We also anticipate
continued margin pressure in sportswear in the second quarter, as we clear the
spring merchandise in anticipation of the new fall product. We anticipate we
will achieve improved performance in fall 2013 with our new and refocused
sportswear product offerings."

Second Quarter and Full Year 2013 Guidance

Inclusive of the strategic actions to improve profitability, the Company
estimates that 2013 second quarter and full year adjusted and GAAP revenues
will be in the ranges of $820 to $850 million and $3.80 to $3.95 billion and
gross margin will be in the ranges of 35.2% to 36.0% and 35.9% to 36.1%.
Selling, general and administrative expenses are estimated to be in the ranges
of $290 to $305 million and $1.20 to $1.25 billion, on an adjusted basis,
while in the ranges of $300 to $315 million and $1.23 to $1.28 billion, on a
GAAP basis.

First Quarter 2013 Earnings and Conference Call on Wednesday, May 1

The Company noted that these 2013 first quarter results and guidance are
preliminary and therefore subject to the Company's completion of its customary
quarterly closing and review procedures. The Company will provide an update on
these matters when it announces final 2013 first quarter results as scheduled,
on Wednesday, May 1, 2013. A conference call with management will be held on
May 1, 2013 at 8:30 am Eastern Time, which is accessible by dialing
412-858-4600 or through a web cast at (under Investor
Relations/Conference Schedule). The call will be recorded and made available
through May 9, 2013 and may be accessed by dialing 877-344-7529 (International
412-317-0088). Enter account number 10026948. A slide presentation will
accompany the prepared remarks and will be posted with the webcast on the
Company's website.

Presentation of Information in the Press Release

Financial information discussed in this press release includes both GAAP and
non-GAAP measures, which include or exclude certain items. These non-GAAP
measures differ from reported results and are intended to illustrate what
management believes are relevant period-over-period comparisons. A
reconciliation of the GAAP measures presented to the comparable non-GAAP
information appears in the financial tables section of this press release.

About The Jones Group Inc.

The Jones Group Inc. ( is a leading global designer,
marketer and wholesaler of over 35 brands with product expertise in apparel,
footwear, jeanswear, jewelry and handbags. The Jones Group has a reputation
for innovation, excellence in product quality and value, operational execution
and talent. The Company also markets directly to consumers through branded
specialty retail and outlet stores, through concessions at upscale department
stores and through its e-commerce sites.

The Company's internationally recognized brands and licensing agreements (L)
include: Nine West, Jones New York, Anne Klein, Kurt Geiger, Rachel Roy (L),
Robert Rodriguez, Robbi & Nikki, Stuart Weitzman, Brian Atwood (L), Boutique
9, Easy Spirit, Carvela, Gloria Vanderbilt, l.e.i., Bandolino, Enzo Angiolini,
Nine & Co., GLO, Joan & David, Miss KG, Kasper, Energie, Evan-Picone, Le Suit,
Mootsies Tootsies, Grane, Erika, Napier, Jessica Simpson (L), Givenchy (L),
Judith Jack, Albert Nipon, Pappagallo and Rafe (L).

Forward Looking Statements

Certain statements contained herein are "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. All
statements regarding the Company's expected financial position, business and
financing plans are forward-looking statements. The words "believes,"
"expects," "plans," "intends," "anticipates" and similar expressions identify
forward-looking statements. Forward-looking statements also include
representations of the Company's expectations or beliefs concerning future
events that involve risks and uncertainties, including:

  othose associated with the effect of national, regional and international
    economic conditions;
  olowered levels of consumer spending resulting from a general economic
    downturn or lower levels of consumer confidence;
  othe tightening of the credit markets and the Company's ability to obtain
    capital on satisfactory terms;
  ogiven the uncertain economic environment, the possible unwillingness of
    committed lenders to meet their obligations to lend to borrowers, in
  othe performance of the Company's products within the prevailing retail
  ocustomer acceptance of both new designs and newly-introduced product
  othe Company's reliance on a few department store groups for large portions
    of the Company's business;
  othe Company's ability to identify acquisition candidates and, in a
    competitive environment for such acquisitions, acquire such businesses on
    reasonable financial and other terms;
  othe integration of the organizations and operations of any acquired
    businesses into the Company's existing organization and operations;
  oconsolidation of the Company's retail customers;
  ofinancial difficulties encountered by the Company's customers;
  othe effects of vigorous competition in the markets in which the Company
  othe Company's ability to attract and retain qualified executives and other
    key personnel;
  othe Company's reliance on independent foreign manufacturers, including
    political instability in countries where contractors and suppliers are
  ochanges in the costs of raw materials, labor, advertising and
    transportation, including the impact such changes may have on the pricing
    of the Company's products and the resulting impact on consumer acceptance
    of the Company's products at higher price points;
  othe Company's ability to successfully implement new operational and
    financial information systems;
  othe Company's ability to secure and protect trademarks and other
    intellectual property rights;
  othe effects of extreme or unseasonable weather conditions; and
  othe Company's ability to implement its strategic initiatives to enhance

A further description of these risks and uncertainties and other important
factors that could cause actual results to differ materially from the
Company's expectations can be found in the Company's Annual Report on Form
10-K for the year ended December 31, 2012, including, but not limited to, the
Statement Regarding Forward-Looking Disclosure and Item 1A-Risk Factors
therein, and in the Company's other filings with the Securities and Exchange
Commission. Although the Company believes that the expectations reflected in
such forward-looking statements are reasonable, such expectations may prove to
be incorrect. The Company does not undertake to publicly update or revise its
forward-looking statements as a result of new information, future events or

Reconciliation of Non-GAAP Measures to GAAP
for the quarters ended April 6, 2013 and March 31, 2012
All amounts in millions, except per   FIRST QUARTER
share data
                                      2013                  2012
Operating income                                 $  17.0            $   
Items affecting segment income:
    Expenses related to retail                   8.5                 0.5
    store closure plan (a)
    Charges related to acquired                  1.8                 (0.9)
    businesses (b)
    Other business development                   -                   0.2
    costs (c)
    Present value adjustments to
    lease liabilities for properties             0.2                 -
    not in use (d)
    Severance and other charges
    related to executive management              -                   3.7
    changes (e)
    Other restructuring expenses                 6.9                 8.9
    and certain other charges (f)
Total adjustments to operating                   17.4                12.4
Adjusted operating income                        $  34.4            $   
Income (loss) attributable to Jones              $   0.6           $    
Provision (benefit) for income                   0.5                 (0.6)
Adjustments to operating income,                 17.4                12.4
from above
Adjustment of remaining consideration
payable related to acquisition
    of Stuart Weitzman (g)                       (0.4)               27.7
Adjusted income before provision                 18.1                38.3
for income taxes
Adjusted provision for income taxes              6.8                 14.3
Adjusted income attributable to                  11.3                24.0
Less: adjusted income allocated to               (0.4)               (0.4)
participating securities
Adjusted income available to common              $  10.9            $   
stockholders of Jones                                                23.6
Earnings (loss) per share - diluted              $  0.01            $  
(as reported)                                                        (0.01)
Provision (benefit) for income                   0.01                (0.01)
Items affecting segment income:
    Expenses related to retail                   0.11                0.01
    store closure plan (a)
    Charges related to acquired                  0.03                (0.01)
    businesses (b)
    Other business development                   -                   -
    costs (c)
    Present value adjustments to
    lease liabilities for properties             -                   -
    not in use (d)
    Severance and other charges
    related to executive management              -                   0.05
    changes (e)
    Other restructuring expenses                 0.09                0.11
    and certain other charges (f)
Adjustment of remaining consideration
payable related to acquisition
    of Stuart Weitzman (g)                       (0.01)              0.35
Adjusted income before provision                 0.24                0.49
for income taxes
Adjusted provision for income taxes              0.09                0.18
Adjusted earnings per share -                    $  0.15            $   
diluted                                                              0.31
(a) 2013 and 2012 include severance, fixed asset impairment and other charges
    and credits related to the closure of underperforming retail locations.
    2013 and 2012 include the adjustments of the contingent consideration
(b) payable for the Robert Rodriguez acquisition and the amortization of
    certain acquired intangible assets related to the acquisition of Kurt
    2013 and 2012 include investment consulting fees, legal fees, accounting
(c) fees and other items related to acquisitions and other business
    development activities.
(d) 2013 includes present value accruals and adjustments for liabilities
    related to leases on properties currently not in use.
(e) 2012 includes severance and restricted stock charges related to executive
    management changes.
    2013 and 2012 include severance, occupancy, and other costs related to the
(f) exit from certain product lines or restructuring of corporate and business
    support functions and other charges not considered by management to be
    part of ongoing operations.
    2013 and 2012 represent the fair value adjustments in accordance with GAAP
(g) of the remaining consideration payable related to the acquisition of
    Stuart Weitzman.
                                      Estimated 2013
                                      Q2         Q2         Full     Full Year
Amounts in billions                   Low        High       Low      High
                                      Range      Range      Range    Range
          GAAP Selling, General &     $                  $     $   
          Administrative Expenses     0.30      $  0.32         1.28
          First quarter 2013
          adjusted amounts from       -          -          0.02     0.02
          Estimated adjusted
          amounts for the remainder   0.01       0.01       0.01     0.01
          of 2013 (h)
          Adjusted Selling, General   $                  $     $   
          & Administrative Expenses   0.29      $  0.31         1.25
(h) Additional costs are expected for severance, asset impairments, costs to
    consolidate facilities and other expenses.

SOURCE The Jones Group Inc.

Contact: Investor Contact: John T. McClain, Chief Financial Officer, The Jones
Group, (212) 703-9189; Media Contacts: Joele Frank and Sharon Stern, Joele
Frank, Wilkinson Brimmer Katcher, (212) 355-4449
Press spacebar to pause and continue. Press esc to stop.