Jones Apparel Group's apparel & sportswear perform better in Q2
29 Jul '05
6 min read
This adjusted range reflects revenue and gross profit reductions in the junior denim business and reductions in the wholesale footwear and accessories business as the Company continues to work with retailers to increase inventory turn and reduce stock levels.
Boneparth stated, "They are in a very solid financial position and have notable strengths relating to the creation of high quality product, superior merchandising skills, and a highly-recognizable brand portfolio. At the same time, we believe that operational execution will increasingly be a key element in driving future success.
As a result, they are in the initial stages of a strategic review of their operating infrastructure to improve profitability and to ensure they are properly positioned for the long-term benefit of their shareholders. By proactively reviewing their infrastructure, systems and operating processes at a time when the industry is undergoing consolidation and change, they plan to eliminate redundancies and improve their overall cost structure and margin performance."
The Company expects the reviews to be substantially completed over the next three months, and estimates that the implementation and execution of the initiatives generated as a result of the reviews already underway, will be substantially completed over the next 36 months. The Company has targeted annual savings of approximately $100 million once all the initiatives have been implemented.
The costs associated with the review and the ultimate execution expenses related to the initiatives that are derived will not be quantifiable until a later date. To date, the Company has estimated $14 million in restructuring expenses associated with the consolidation of its denim manufacturing operations and $12.8 million in manufacturing inefficiencies associated with the transition plan, resulting in full year estimated cost savings of $5 million.
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