The Jones Group Works To Improve Profits
Earlier this week, The Jones Group announced a series of actions that will be taken in the hopes of improving profitability. The fashion company, which owns Jones New York, Nine West, and Anne Klein, will close approximately 170stores and cut 8% of its workforce. After the cuts were announced, shares of the company rose 2.7& to $13.97 on the New York Stock Exchange.
Earlier this year, activist hedge fund Barington Capital Group met with Jones Group management and suggested the company cut expenses and focus on its most successful brands, while possibly selling other brands. Last year, sales during the holiday season fell about seven percent, indicating just how much the company is struggling to face aggressive competition.
The retailer hopes that by mid-2014, these actions will generate approximately $40 million in annual pretax savings. In a statement, the company said that the plan will result in costs of $40 million to $60 million in the next 15 months. The restructuring is already underway, with 50 stores announced in Q4 of 2012. Domestic retail staff will be reduced by approximately 18%, and corporate, support, and supply chain staff by 2%, which will take the total reduction to 8%—about 850 jobs—upon completion. The staff reductions and terminations notifications began April 1, and will continue through the first half of 2014.
At the end of 2012, Jones had a total of 594 domestic retail stores, including 409 outlet stores. The company had about 6,250 full-time employees and about 5,540 part-time employees as of December 31, according to a regulatory filing.
Jones Group shares are up 23% so far this year.