Jones Apparel Reportedly Considering Sale of Barneys

Stymied by an inert stock price, Jones Apparel CEO Peter Boneparth is reported to be considering the sale of luxury department store chain Barneys New York, the company's best-performing asset. Barney's is not yet on the market and Jones has declined to comment in advance of earnings, which will be reported Wednesday. The 2004 purchase of Barneys for $400 million was questioned by analysts as inconsistent with Jones's moderate portfolio, which includes Nine West and Gloria Vanderbilt. Barneys has thrived, however, vindicating Boneparth's advocacy of the high-end purchase. If Jones sells Barneys, it can use the proceeds to buy back stock, invest in brands or buy new ones. A sale could also, however, make Jones even more vulnerable to weakness in the moderate apparel sector. It would come at a difficult time for the company: Boneparth just fired Heather Pech, the head of the retail division; CFO Thimios Sotos resigned last month; and Boneparth himself has failed to reach a contract extension agreement with the company. Boneparth attempted last year to sell the whole company to a private equity firm, a move that ended ignominiously five months later when the auction was canceled due to insufficient bids.

Sources: Wall Street Journal
Commentary: Jones Apparel: Room to Grow -- Barron's • No Private Equity Suitors for Bally, Jones Apparel, Others
Stocks/ETFs to watch: Jones Apparel Group, Inc. (JNY). Competitors: AnnTaylor Stores Corp. (ANN), Liz Claiborne Inc. (LIZ). ETFs: Retail HOLDRS ETF (RTH), SPDR S&P Retail (XRT), PowerShares Dynamic Retail (PMR)

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