This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Is Jones Group a Good Value Pick?

NEW YORK ( TheStreet) -- One of the most exciting parts of value investing -- to me anyway -- is the hunt for "reclamation projects," companies that have seen better days and are struggling to right the ship.

Often, the markets have little patience for these names and punishes them severely for a long time.

One of the risks that value investors take in these cases is that they are buying the dreaded "value trap": It looks like value and smells like value, but there's actually little or no life left.

If you don't dig deep enough, you can easily convince yourself that a name is too cheap to pass up. Three years later, nothing has changed, and the stock still appears to be cheap, but has gone nowhere. Or worse yet, it has gotten "cheaper," as the price has continued to drop.

Jones Group (JNY), (known as Jones Apparel when I owned it in the past) has been a rags-to-riches-to-rags story over the years.

The company is in a tough industry. It designs and markets women's clothing, shoes and accessories, in both the retail and wholesale sides of the business. The past four years have been difficult at best.

Following losses in 2008 and 2009, the company returned to profitability in 2010, but margins have declined to the point that if you looked at the bottom line without knowing any better, you might think you were viewing the financials of a grocery store chain. Net margins that were in the 6% to 8% range in the mid 2000s are now in the 1%-plus range.

Higher-end apparel and shoes is not a great place to be in difficult economic times, and the lower-margin products the company had been moving toward did little to help turn the company around.

Now Jones is again focusing some efforts on the higher end, having acquired interests in several brands over the past few years, such as Stuart Weitzman in 2010. In 2011, the company acquired Kurt Geiger, a European shoe retailer, for $352 million. Jones is not giving up on core brands such as Jones New York and Nine West, and is in the process of "revitalizing" them.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
JNY $14.99 0.20%
AAPL $118.03 -0.71%
FB $105.41 -0.31%
GOOG $748.15 -0.02%
TSLA $229.64 5.22%


Chart of I:DJI
DOW 17,813.39 +1.20 0.01%
S&P 500 2,088.87 -0.27 -0.01%
NASDAQ 5,116.1430 +13.3350 0.26%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs