Jones Apparel Group ( JNY) posted a higher second-quarter profit Tuesday that topped analysts' estimates by 2 cents, boosted by new product introductions and inventory management. But the company also provided mostly negative guidance for the next two quarters, helping to send its shares down 83 cents, or 2.2%, at $36.42 in Tuesday trading. New York-based Jones, which recently acquired Maxwell Shoe Company ( MAXS) after roughly five months of heavy negotiations, earned $77.6 million, or 61 cents a share, in the quarter ended July 3, up from $71.1 million, or 54 cents a share, in the year-ago period. The analyst consensus was for 59 cents a share. Revenue increased 7.4% to $1.05 billion. The company, which owns the Nine West and Bandolino footwear lines as well as the Energie, Gloria Vanderbilt and Jones New York Collection clothing lines, said the quarter's results were helped by its acquisition of Kasper, which was completed in the fourth quarter of 2003, as well as its introduction of the Jones New York Signature clothing line. "Our diversified and balanced business model performed admirably against a cautious backdrop of consumer sentiment and conflicting reports regarding employment," Jones said in a statement. However, the company's enthusiasm was more muted for the upcoming quarters. "Overall, we remain cautious due to the numerous factors creating uncertainty in the marketplace yet optimistic in our business model and our ability to manage through this environment." Excluding results from Maxwell Shoe, the company expects third-quarter earnings of 84 cents to 87 cents a share on revenue of $1.23 billion to $1.24 billion. Analysts had been calling for 97 cents a share. In the fourth quarter, Jones expects to earn 57 cents to 60 cents a share, within range to above analysts' consensus for 57 cents a share. Jones sees revenue at $1.02 billion to $1.03 billion. Full-year EPS is thus seen at $2.75 to $2.80, up from a prior guidance of $2.68 to $2.80 a share, on sales of $4.52 billion to $4.54 billion. The Wall Street consensus had been $2.86 a share. Jones noted that Maxwell Shoe, which it formally acquired on July 8, should have net income of $70 million in the third quarter and $45 million in the fourth quarter. The acquisition, however, should hurt Jones' overall earnings by 3 cent to 4 cents a share in the third quarter and by a penny to 2 cents a share in the fourth quarter.
As a result, full-year 2004 earnings should be $2.70 to $2.76 a share, after 4 cents to 5 cents a share in dilutive affects from Maxwell. Revenue is expected at $4.635 billion to $4.655 billion, including Maxwell. Meanwhile in 2005, the Maxwell acquisition should add 10 cents a share to consolidated earnings. The consensus is for $3.22 a share.