Earnings Preview: Jones Apparel Group

Jones Apparel Group (JNY) is expected to report Q4 earnings Wednesday with a conference call scheduled for 8:30 a.m. ET.

Guidance

Analysts are looking for a profit of 7c on revenue of $874.76M. The consensus is 2c to 14c for EPS, and revenue of $733.6M to $926.1M, according to First Call. The company sees FY07 EPS $1.20 to $1.25 vs. First Call consensus of $1.25.

Analyst Views

Zacks analysts recently upgraded shares of Jones, which has pursued a multi-brand strategy by marketing its products under several nationally known brands, to Strong Buy from Hold.

Though 2007 was a tough year for the company, the firm said perhaps the valuation on this apparel designer has become sufficiently attractive to some brokerage houses. Due to higher fuel and energy costs, lower consumer confidence, recession-related fears and the housing market turmoil, apparel companies will be vulnerable to ratings downgrades in the coming months as a weak economy hurts sales, according Standard & Poor's. Apparel companies are likely to be impacted by more spending on consumer electronics as well as the lack of a "must-have" apparel items, which may affect 2008 results.

S&P believes that moderately-priced retailers will be pressured by lower-priced mid-tier retailers with exclusive and private-label brands. The analysts, which hold a Cautious view on the stock, feel Jones Apparel is the most likely to receive downgrades or negative outlook revisions because it "does not have a strong portfolio" of brands.