Jones Apparel Still Has Wrinkles

Omar Saad, an analyst with Credit Suisse, believes that Jones still needs a lot of work before it sees significant improvement.

"While we are encouraged by the company's plans to exit $300 million of low-margin moderate businesses by year end, we continue to believe Jones faces ongoing structural challenges, including the marginal and less distinctive brands in its portfolio, high exposure to consolidating department stores, and high exposure to the difficult moderate segment," Saad wrote in a research note. "We think it will take years rather than quarters (and much higher marketing and branding investment) to elevate excitement around the Jones portfolio."

For his part, Card acknowledged that it's still early in the turnaround process, but said he is encouraged by the early progress.

"Despite the overall challenges in the macro economic environment, I am confident that through the initiatives that began several months ago, we have laid a strong foundation for operational improvements and we will begin to see results into 2008 and beyond," he said.

Jones Apparel maintained its forecast for full-year adjusted earnings of $1.20 to $1.25. Analysts project a profit of $1.28 a share with sales.

Jennifer Black, an independent retail analyst, is optimistic about Jones' comeback.

"Wes Card has taken on the challenge of getting his company back on track, and is demonstrating his resolve," Black said in her research. "We believe the company is now focused on growing a solid business versus running a business to sell. The company is investing in the businesses it believes it has opportunity in and has begun to take the steps to address those businesses that are not performing."