What better way to celebrate the end of the worst recession in modern history than with a new pair of jeans or a casual top? In fact, dodging another depression probably warrants a new pair of shoes or a handbag.
Just in time for summer, this type of renewed spirit was inherent in the first quarter report of Jones Apparel Group, Inc. (JNY). The retailer announced a strong performance in late April that pushed earnings estimates higher for this year and next by double digits in the past 12 weeks. Such a solid trend gives the company a lot of running room to continue its growth story moving forward.
The company hasn’t had much of a problem performing favorably against quarterly expectations, but it isn’t sitting on its laurels. Acquisitions are a part of this company’s growth strategy, and it recently completed the purchase of a majority stake in the Stuart Weitzman shoe brand.
First-Quarter Report
Jones Apparel Group outlined some positive retail trends in its first-quarter report from late April. Earnings per share reached 47 cents, excluding items, marking a substantial improvement over the previous year’s 28 cents.
The result was also nearly 40% better than the Zacks Consensus Estimate, which is technically a positive surprise, but there’s nothing out of the ordinary about Jones Apparel pleasing the Street. The company may not always beat quarterly expectations, but it hasn’t missed in nearly 3 years. (Then again, sometimes it beats in the triple digits.) Most importantly, it has an excellent record of meeting or surpassing quarterly earnings expectations:
Revenues of $887 million were slightly below the year-ago result, but still exceeded the company’s expectations. Operating margins increased in all segments.
Jones Apparel Group appreciates the renewed interest from consumers, but said that the “economic environment remains unclear and consumer spending is unpredictable”. To continue positioning itself for growth, the company has not been shy to make some acquisitions, such as the recent pick-up of the Robert Rodriguez Collection.
More recently, though, Jones Apparel Group completed its acquisition of 55% of Stuart Weitzman Holdings, LLC for $180 million. The privately-held company is a leading designer and manufacturer of women’s salon footwear and accessories.
These will be added to the company’s impressive list of brands, which includes Jones New York, Nine West and Anne Klein. At the end of the quarter, the company had 877 locations after closing 63 retail locations during the period.
Earnings Estimates for Jones Apparel Group
Earnings estimates have been steady for Jones Apparel Group of late, which means it has retained the spark received after the quarterly report.
The Zacks Consensus Estimate for this year is $1.58 per share, or practically 18% better than 2 months ago.
Meanwhile, the guidance for next year has advanced 15.3% in 2 months to the current Zacks Consensus Estimate of $1.81 per share. Furthermore, this outlook suggests year-over-year improvement of 14.6%.
