Jones Apparel (JNY), which owns Nine West, Anne Klein and Jones New York, announced today that it will shutter 225 stores in an effort to cut costs.
The company also posted better-than-expected earnings in the first quarter that easily surpassed analysts' projections, sending shares soaring 17% to $9.53 in afternoon trading.
While the company did not specify which stores will get the axe, it said closures will take place across all retail concepts. This should result in about 700 to 1,000 employees losing their job, on top of the 375 workers laid off during the first quarter.
Store closures are expected to result in annual savings of about $20 million, including $13 million this year.Jones, like many of its rivals, including Liz Claiborne (LIZ) and VF Corp. (VFC - Get Report), has suffered as major stores have cut back on inventory amid the severe pullback in consumer spending. Earnings during the quarter fell to $300,000, or flat a share, from $19.5 million, or 23 cents a share, in the year-ago period. Excluding one-time items, the company earned 28 cents, beating analysts' estimate of 10 cents a share. Revenue fell 8.6% to $891 million, while sales at stores opened at least a year declined 10.6%. The company said sales declined across all segments except the wholesale jeans business. Jones altered full-year earnings and now expects profit in the range of $3.3 billion to $3.5 billion. This is down from a previous forecast of $3.3 billion to $3.54 billion. For the second quarter, it said it expects revenue to decline 5 to 8 percent.