Earnings Preview: Jones Apparel Group

Jones Apparel Group (JNY) is expected to report Q2 earnings before market open Wednesday, July 30 with a conference call scheduled for 8:30 am ET.

Guidance

Analysts are looking for a profit of 12c on revenue of $834.32M. The consensus range is 5c to 16c for EPS, and revenue of $808.41M to $846.9M, according to First Call.

Analyst Views

In April, Jones forecast FY08 EPS $1.20 to $1.35 vs. First Call consensus of $1.17. At June's Reuters Consumer and Retail Summit, CEO Wesley Card said that warmer weather and U.S. income tax rebates began to fuel demand for the company's shoes and clothes during the quarter. While sales may be pressured by factors such as lower consumer spending, high gas and food prices, along with the sagging housing market and tightened credit, Card said profits and margins can be strong "with inventories appropriately managed". Card also said rising material costs will pressure margins next year on apparel, particularly in footwear and accessories.

Analysts and investors will look for comments from Jones on not just consumer spending trends, but rising costs for labor, fuel and other commodities; much of Jones Apparel's inventory are made in China, where costs of fuel and labor are increasing. Due to concerns over its "poor operating performance" and "inability to improve its operating margins," Moody's Investors Services placed Jones Apparel's Ba1 corporate family rating under review for a possible downgrade in May.