Jones Group, a clothing, shoes and accessories maker that owns chains including Nine West and Easy Spirit, on Wednesday said it's closing 170 U.S. stores and slashing jobs as part of a plan to improve profitability.
Jones Group, a clothing, shoes and accessories maker that owns chains including Nine West and Easy Spirit, on Wednesday said it’s closing 170 U.S. stores and slashing jobs as part of a plan to improve profitability.
A Jones Group spokeswoman says that 8 percent of the company’s 10,000 jobs will be cut, or about 800 U.S. positions.
The New York company, which also sells its products through department stores, had had stagnant sales, and it posted a loss last year. Its sportswear lines and its own stores run lots of discounts. In the first quarter, it expects adjusted earnings per share to fall by about half because of more markdowns. Moreover, sales were hurt by unusually cold weather.
For the current period, it expects revenue to be between $820 million and $850 million and between $3.8 billion and $3.95 billion for the year. That’s worse than expected. Analysts had predicted revenue of $901.8 million for the second quarter and $3.97 billion for the year, according to FactSet.
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Shares of Jones Group Inc. fell 23 cents, or 1.7 percent, to $13.38 in morning trading. The stock had gained 11 percent over the past 12 months.
Of the stores Jones Group is shutting down, 50 had already been announced at the end of last year. It had U.S. 594 stores at the end of 2012, having closed 106 stores during the year. Outlets will account for a far greater percentage of stores after the plan is carried out. Jones Group is also considering converting some stores to more profitable brands and consolidating factories.
The company is cutting 18 percent of the staff in its stores and 2 percent of its corporate and supply chain jobs. At the end of last year, Jones Group had 4,860 full-time U.S. employees and 5,540 part-time employees, almost all employed in the company’s stores.
The moves should save about $40 million per year, before taxes, by the middle of 2014. This year, savings are expected to be $11 million.
Jones Group expects the streamlining of the company to cost of $40 million to $60 million over the next 15 months. The closures should be done by the middle of next year.
In the January-March quarter, the company expects earnings per share, excluding one-time items, of 15 cents, down from 31 cents the year before. Analysts had predicted earnings of 25 cents per share.
Revenue rose 7 percent to about $1 billion, in line with analyst forecasts.
The company reports full first-quarter results on May 1.