Thursday, Jones Apparel Group, Inc. (JNY) said its fourth-quarter adjusted earnings may come in lower than the current estimates of Wall Street analysts. The news triggered a downward rally of JNY shares, with the stock losing more than 7% on Thursday.
The New York-based company revealed it expects to report adjusted earnings per share from continuing operations in the range of $0.08 to $0.11 for the fourth quarter, compared to an adjusted loss per share from continuing operations of $0.04 for the fourth quarter of 2008. On average, eight analysts polled by Thomson Reuters currently expect earnings of $0.11 per share for the fourth quarter. Analysts' estimates typically exclude special items.
Adjusted earnings for the quarter exclude impairment and restructuring charges and other items not considered part of ongoing operations.
On a GAAP basis, the company expects to report a loss per share from continuing operations in the range of $1.53 to $1.56 for the fourth quarter. This range compare to a loss per share from continuing operations of $9.86 for the fourth quarter of 2008.
The company expects a projected loss from continuing operations attributable to Jones in the range of $130.5 million to $133.5 million for the fourth quarter, compared to $822.8 million in the fourth quarter of 2008.
For full year 2009, the company expects to report adjusted earnings per share from continuing operations in the range of $1.11 to $1.14, compared with 2008 adjusted earnings per share from continuing operations of $0.87. Analysts, on average, currently expect the company to report earnings of $1.14 per share for full year 2009.
On a GAAP basis, the company expects to report a full year 2009 loss per share from continuing operations in the range of $1.02 to $1.05. This compare to a loss per share from continuing operations of $9.05 for the full year 2008.
The company expects fourth quarter and full year 2009 results to include a pre-tax, non-cash charge of $150 million for the impairment of certain goodwill and trademark amounts. Of the $150 million non-cash charge, $121 million relates to the impairment of goodwill recorded in connection with retail business and the balance of $29 million relates to the impairment of trademarks utilized in wholesale jeans wear and wholesale footwear and accessories businesses.
The company expects to report $330 million of cash on hand at December 31, 2009, with no amounts drawn under its $650 million revolving credit facility. Additionally, the company expects to report cash provided by operating activities from 2009 of $345 million. The company's previous guidance was for cash on hand of $200 million and cash provided by operating activities in excess of $200 million. The increase in cash on hand and cash provided by operating activities is primarily due to inventory control, lower working capital requirements, and the timing of certain cash receipts and payments, the company noted.
Further, the company said it will continue to implement its previously-announced retail improvement plan to right-size the retail portfolio, with the goal of enhancing segment profitability, reducing capital expenditures, and improving return on invested capital. To date, the company has exited 99 locations and remains on track to exit a total of 265 locations, with the remaining closings scheduled to occur throughout the remainder of 2010. The company expects to report a profit on an adjusted basis in the retail segment in the fourth quarter 2009.
JNY closed Thursday's regular trading at $14.24, down $1.09 or 7.11%, on a volume of 2.72 million shares on the New York Stock Exchange.
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