Jones Update: Large Markdowns During Holidays Could Hit Results
The Jones Group (NYSE:JNY) provided huge markdowns prior to Christmas to overcome what looked to be a lackluster holiday season for the company. Some of its discounts were up to 80% off on its most well known brand, Jones New York, which is exceptionally high considering the “aspirational luxury” nature of the brand. Additionally, the company is under significant pressure from its wholesale customers to provide severe markdowns on its merchandise. Jones Group competes with brands like Liz Claiborne (NYSE:LIZ) and Phillips-Van Heusen (NYSE:PVH) as well as department store mainstays such as Polo Ralph Lauren (NYSE:RL) and store-owned private labels.
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Extreme markdowns can take a toll on Jones’ next quarter results
The 2011 holidays looks to be a forgetful season for Jones. The company hasn’t been in much news regarding holiday special deals, which has resulted in wholesale customers to increase its promotions in order to clear the stock. We believe the discounts right before Christmas were in response to this, but could have been too late.
- Jones Group’s Earnings: Continued Struggle in Q4 Justifies Acquisition
- Sycamore Partners To Buy Jones Group For $15 Per Share
- A Review Of Jones Group’s Jeanswear Business’ Slump And Revival
- Jones Group’s Results Slip As Apparel Industry In The U.S. Remains Weak
- Jones Group Will Rely On International Growth To Offset Domestic Weakness
- How Jones Group Is Reviving Its Main Brands – Jones New York & Nine West
Taking cues from the holiday season, we expect Jones to register a decline in its total revenues. Additionally, we also expect the company to end up with higher than comfortable inventory levels in Q4.
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