Jones Apparel Steps Out in Style

Jones Apparel Group (JNY ) is marching to a different drummer--and it's headed upward. While most other apparel and retailing stocks have been flattened by the fierce downtown, Jones has zipped from 27 in December to 42.97 five months later. One reason: Jones had a bang-up Christmas, with record fourth-quarter sales and earnings. And first quarter, 2001, was also upbeat: Earnings of 75 cents a share beat Street expectations of 71 cents. Jennifer Black of Wells Fargo Van Kasper says Jones's vast rack of brands, including Nine West, Evan-Picone, and Lauren by Polo Ralph Lauren, lets it grab market share.

Black, who rates Jones a "strong buy," thinks the runup is far from over: Her 12-month price target is 55, or 16 times her 2002 estimated earnings of $3.44 a share. For 2001, Black sees Jones earning $3. Jones's success in adding brands has been mainly through acquisitions. Its latest buy--for $572 million--was the McNaughton Apparel Group, which should immediately boost earnings. Black figures it will add 5 cents to 6 cents a share to next year's bottom line.

Black expects Jones's acquisition mode will continue after digesting the McNaughton deal. And she expects Jones will continue to surprise the Street "and pull rabbits out of its hat."

By Gene G. Marcial

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