Jones Apparel getting boost

By Martinne Geller

NEW YORK (Reuters) - Warmer weather and U.S. income tax rebates have begun to fuel demand for clothes and shoes made by Jones Apparel Group Inc (JNY.N: Quote, Profile, Research, Stock Buzz), the company's chief executive said on Monday.

Sandals, T-shirts and lightweight dresses have been selling particularly well over the past couple months, Chief Executive Wesley Card told the Reuters Consumer and Retail Summit.

"We saw a definitive pickup as the weather turned. I wouldn't categorize it as really robust, but there is less inventory in the channel," Card said, meaning that retailers were taking on less stock to avoid having to take big markdowns to move unsold merchandise.

Jones Apparel makes clothes and shoes under names including Jones New York, Nine West and Anne Klein, and sells its goods through department stores and its own stores.

Card, who has been in the top job for less than a year, said there are mixed views on how strong the second half of the year will be.

"I don't think it's great, but I think it's better than the way it's being portrayed," he said.

Analysts, economists and retailers expect a weak holiday selling season this year as consumer spending has slowed while the average price of a gallon of gasoline has topped $4, the housing market has sagged, access to credit has tightened and food prices have jumped.

These factors may pressure sales, Card said, but with inventories appropriately managed, profits and margins can be strong.

New York-based Jones Apparel cut its full-year earnings forecast in April, citing the worsening economy and conservative ordering by its retail customers. The company expects to earn $1.20 to $1.35 per share on revenue of $3.62 billion to $3.78 billion.

Analysts' average estimate calls for earnings of $1.20 per share, excluding items, on revenue of $3.64 billion, according to Reuters Estimates.

INFLATION

Aside from weak consumer spending, manufacturers such as Jones Apparel must contend with rising costs for labor, fuel and a host of other commodities.

Card said rising raw material costs, such as the gold used in costume jewelry, would pressure margins next year on apparel and, in particular, footwear and accessories.

"I think next year we're going to start to see some low-single-digit price increases in footwear and accessories. I think it's unavoidable," he said.

Roughly 90 percent to 95 percent of the shoes sold in the United States are made in China, where costs of labor and fuel are rising. But unlike apparel production, which often moves to ever-cheaper frontiers, footwear factories are highly mechanized.  Continued...