Jones Apparel reports higher-than-expected quarterly profits

New York City Cost cuts and increased sales in its wholesale jeans business helped Jones Apparel report revenue of $891 million for the first fiscal quarter ended April 4. While this was a drop from $975 million in the first quarter of 2008, the company said the earnings were higher than it expected.

Net income was $300,000 for the quarter, a sharp decline from $19.5 million for the same period a year ago. Same-store sales also fell 10.6% for the quarter.

To ride out the turbulent economy, Jones adopted a new plan that it expects will enhance profitability and deliver a stronger return on its investments. The company will shutter 225 locations during 2009 and 2010; however, it also plans to test new concepts such as ShoeWoo, a store dedicated to footwear.

Jones expects the plan to produce savings and improve results by $3 million in 2009, $14 million in 2010 and $20 million in 2011. These actions will also reduce future capital expenditures relating to such locations, according to a company statement.

The company is also pursuing a new senior secured credit facility for up to $650 million, which will replace its existing $600 million credit facility that expires in May 2010. The new credit facility will provide Jones with greater flexibility and provide more stability while weathering the current economic environment.