Barneys under Dubai ownership?

Luxury fashion retailer Barneys New York is close to finding a new owner. According to various media reports, owner Jones Apparel Group is close to an agreement to sell the retailer to Isithmar, the investment arm of the Dubai government for about $825 million. This is more than double the amount Jones Apparel Group paid for Barneys in 2004.

Although neither party has commented on the potential sale, it is believed that the acquisition of Barneys would be a major coup for Isthithmar. The investment vehicle has purchased a number of prominent New York properties in recent times, notably the Mandarin Oriental Hotel in the Time Warner Centre. Barneys' would be its first major upscale retail acquisition.

Jones Apparel, which owns retailers Anne Klein, Jones New York and Nine West, surprised the world when it acquired the exclusive retailer three years ago. Barneys has long been an institution in the fashion world and among fashionable clients, selling such coveted brands as Marc Jacobs and Jil Sander at sky-high prices. The connection with a mid-market retail group like Jones Apparel seemed incongruous. Yet, if the group manages to off-load the retailer for more than double its purchase price, Jones Apparel will have the last laugh.

www.jonesapparelgroup.com
20 June 2007

Jones withdraws from sale

American Jones Apparel Group has announced that the company is no longer for sale. "The board has concluded that at this time the best alternative to maximize long-term shareholder value is to continue executing on the company's strategic business plan," Jones chief executive Peter Boneparth said in a statement. The fashion group, which owns retailers like Barneys and Nine West, has seen profits slip during the past few years. The gross margin dropped from 36.89 percent to 36.07 percent between 2001 and 2005. Operating margins fell to 9.8 percent from 11.8 percent. The news that the sale would be discontinued caused shares to fall 1.6 percent. Financial sources told WWD that the sale fell apart after private equity firm Bain Capital bid $28 a share, while the Jones board expected $36. Sources say that Boneparth could chose to do a variety of things, including leading a leveraged buyout firm himself or selling the company to an equity fund for a lower price. Experts agree, however, that an acquisition would not be a good idea, especially because the pool of possible targets is dwindling due to consolidation in the market. Boneparth has said in the past that acquiring a company worth less than $100 million would not be worth it. "In our world, at that level, smaller deals just don't move the needle," he said at a WWD/DNR CEO Summit in 2003. Furthermore, the company would risk overpaying for deals. The aborted sale begs the question what will happen to brands like Barneys and Nine West. Interest in Nine West was significantly more than in Barneys.

Sources told WWD that Bain was worried about the lack of cash flow at Jones and about the high-yield market. Meanwhile, Jones has been addressing the cash flow problem by cutting staff and restructuring the business. These are, however, short-term solutions. The group plans to continue making staff cuts to curb costs and boost cash flow. Various sources have blamed the loss of the Polo license on Jones current struggles. However, consultant Emmanual Weintraub does not believe the company is in any real trouble and will survive to come out on top. "The important lesson is your brands have to stand for something," he told WWD. "They have to move more aggressively out of the middle tier into a more upscale marketplace."

www.jonesapparel.com
16 August 2006

Jones Apparel profits plummet

US fashion group Jones Apparel has reported a 70 percent drop in first quarter profits due to the sale of the Polo Jeans business. Earlier this month it sold the license back to Polo Ralph Lauren. The group said it planned to use the proceeds of the sale to explore new strategies, including acquisitions.

Excluding the effect of the sale, earnings exceeded expectations.

Jones put itself up for sale last month. The group, which owns brands like Jones New York and Anne Klein and operates Nine West and Barneys New York, is being courted by private equity groups Texas Pacific Group, Bain Capital and Cerberus Capital Management, reports WWD.

The group's net income dropped from $87 million (£48.7 million) a year ago to $25.8 million. Although with adjusted earnings - after cutting out the loss from the Polo sale, severance costs and new accounting methods - Jones Apparel beat expectations.

Net sales for the quarter dropped to $1.2 billion from $1.34 billion the year before, although same store sales rose 0.9 percent at Jones' footwear and ready-to-wear businesses and 6.6 percent at luxury department store Barneys.

www.jonesapparel.com
27 April 2006

Jones Apparel possibly for sale

US-based Jones Apparel Group said that it is contemplating selling the entire company. In a statement, the group said that, contrary to recent reports, it was not considering the "divestiture of any of its businesses or divisions". The group owns brands such as Jones New York, Gloria Vanderbilt and Anne Klein and operates retailers Nine West and Barneys New York.

Jones has suffered falling sales for two consecutive years and a further decline in sales looms as its biggest customer, Federated Department Stores, has reduced orders from apparel makers. Federated, which owns Macy's and Bloomingdale's, united with May Department Stores and launched its own label brands.

Last year the group realized sales of $1.5 billion (£857 million) and had a market capitalisation of $4 billion. In January, the company announced a rise of 63 percent in fourth quarter profits, thanks largely to strong sales at its Barneys chain. Jones acquired the luxury department store chain in 2004 for approximately $400 million.

In February, the group sold its Polo Jeans license back to Polo Ralph Lauren.

Investment bank Goldman Sachs has been hired as a financial adviser.

www.jonesapparel.com
22 March 2006

Q4 earnings soar at Jones Apparel

US fashion retail group Jones Apparel has seen its fourth-quarter earnings soar, but it full-year earnings take a dip.Earnings for the fourth quarter climbed 63 percent to $55.7 million (£32.1 million) from $34.1 million last year. Revenues for the quarter rose to $1.221 billion, compared with $1.08 billion during the same period last year.

Meanwhile, full-year revenues rose from $4.65 billion last year to $5.07 billion.

"We realised better -than-expected results in our licensed businesses and our Gloria Vanderbilt moderate apparel business, as well as our luxury Barneys retail stores," said president and chief executive Peter Boneparth. "We noted improvement in the selling of our footwear products and were also satisfied with the performance of our apparel product lines. We were pleased with our Barneys luxury stores, which posted an 8.0 percent comparable store sales increase for the fourth quarter, bringing the full year comparable store sales increase to 10.8 percent. Our footwear and ready to wear stores posted a 2.8 percent comparable store sales increase for the fourth quarter, resulting in a 0.2 percent decrease for the full year."

Boneparth revealed that 2005 had been a "challenging" year due to a difficult economic climate and the consolidation of the company's two largest wholesale customers.

The company said that, with the spate of consolidations in the department store sector, it plans to open more of its own stores. It said it will open 15 Anne Klein New York accessories stores this year, and will also be stepping up store openings of its Bandolino brand. The group will also soon open a Barneys New York flagship store in Boston, and a store in Dallas later in the year. Boneparth said the company is also looking at sites for more stores in 2007 and beyond. He also told WWD that acquisitions in retail are also being considered.

Looking forward, Boneparth said that the company is planning cost reductions of $100 million over the next two years. This year will see the company considering ways to grow its existing brands and to redistribute the proceeds of the sale of Polo Jeans.

"Our growth strategy for 2006 and beyond is to continue our strategic partnership with our wholesale customers," said Boneparth. "Further, we continue to explore our own vertical retail opportunities through our Barneys flagship and co-op concept stores, as well as our own footwear and ready to wear stores."

Jones Apparel estimates revenues in 2006 of $4.65 billion to $4.75 billion.

www.jonesapparel.com
16 February 2006

Jones Lowers Q4 Estimates

American Jones Apparel Group Inc has lowered its fourth-quarter earnings-per-share guidance to $0.28-$0.30 from a previous estimate of $0.40-$0.45. The company says it expects revenue will total around $4.65 billion for the full year, with earnings per share of between $2.39 and $2.41. Previous 2004 full year earnings-per-share guidance was $2.51 to $2.56.

Peter Boneparth, chief executive officer, said that the quarter had been more challenging than it expected. "Most challenging was a higher level of promotions experienced by our retail customers than we anticipated." The company, known for brands like Jones New York, Anne Klein, Kasper, Gloria Vanderbilt and Nine West, expects earnings per share to total $3.00 to $3.10 in 2005.

www.jonesapparel.com
25 January 2005

Barneys acquisition complete

Yesterday the US Jones Apparel Group Inc successfully completed its acquisition of the department store Barneys New York Inc. The transaction cost Jones $397.3 million (GBP215.5 million), which included $19 per common share to Barneys shareholders, amounting to a total of $291.3 million. Furthermore, Jones subsidized the repurchase of Barney outstanding Senior Secured Notes due 2008, with a face value of $106 million.

Chief Executive Officer of Jones, Peter Boneparth, was pleased with the transaction, stating that it complemented the Jones diversification program and would add an extra dimension to the company's current portfolio. This consists of Jones New York, Evan-Picone, Norton McNaughton and Gloria Vanderbilt.

www.jonesapparel.com
22 December 2004

Jones buys Barneys

The shoes and clothing company Jones Apparel Group Inc. is buying upmarket department store Barneys New York Inc. for $106 million (GBP167.4 million) in cash. With this acquisition, Jones will enter the luxury retail arena.

Jones is to pay Barneys' stockholders $19 per share and will take on approximately $106 million in Barneys debt. The deal was announced last week Thursday, with full support from both companies' boards and 75% of stockholders supporting the transaction. Therefore, no further stockholder action needs to be taken.
Barneys expressed interest in a strategic alliance, including a sale of the business, to promote growth of the company earlier this year. To this end it retained investment banks Morgan Stanley and Peter J. Solomon Co. as financial advisors. Barneys survived bankruptcy in 1999, with its two majority shareholders, Whippoorwill Associates Inc. and Bay Harbour Management LC, focusing on strengthening its position in the luxury retail market.

Barneys has flagship stores in Manhatten, Beverly Hills and Chicago, three regional full-price stores, four Co-Op Barney New York stores, focusing on young trendy fashion, and eleven outlet stores. With net sales of $442.2 million (GBP251.5 million), the company employs approximately 1,400 employees.
In addition to the Jones brand, Jones Apparel recently acquired Gloria Vanderbilt and Kasper, which owns the Anne Klein label, and also owns the Nine West shoe brands. Jones Apparel generated $ 4.3 billion (GBP2.45 billion) in sales last year.

Following the closure of the deal - which should take place this December - the current Barneys team, spearheaded by chariman, president and CEO of Barneys, Howard Socol, will remain in place to lead the expansion of the business. Socol told reporters that he was excited by the possibilities for Barneys as part of the Jones Apparel Group. He added that the company is considering expansion beyond the spring of 2005 with Co-op store openings in Chicago, Costa Mesa, Calif., and Atlanta.

www.barneys.com
www.jny.com
15 november 2004

Takeover Hilfiger by Jones Apparel?

Jones Apparel Group, in the midst of a licensing battle with Polo Ralph Lauren, has held preliminary discussions to acquire Polo rival Tommy Hilfiger.
No deal is imminent, and only informal discussions have taken place between the chief executives of the two companies The Wall Street Journal reported. Up till now both companies have declined to comment.
Both sides have good reasons to keep up the dialogue. In the past few years, luxury-goods companies and large apparel makers looking for prestige brands have snapped up major American fashion houses such as Donna Karan. Earlier this year, shirt maker Phillips-Van Heusen acquired Calvin Klein, leaving Tommy Hilfiger as one of the last publicly traded fashion companies dependent on a single brand.
Tommy Hilfiger has been seen particularly vulnerable to a takeover because it has USD 400 million in cash, a market capitalization of USD 539 million and has been pounded by weak sales and declining market share in its core menswear business.
Jones Apparel, owner of Nine West, Jones New York and Norton McNaughton, has built itself into America's second-largest publicly traded apparel company, with 2002 sales of USD 4.34 billion, after VF Corp.

March 29, 2003

Jones Apparel Earnings Rise

Clothing maker and seller Jones Apparel Group Inc. said Wednesday profits rose sixty five percent in the fourth quarter -- bucking the weak retail climate -- helped by acquisitions and a varied brand portfolio. Jones, whose brands include Jones New York, Gloria Vanderbilt and Nine West, said income for the fourth quarter rose to 51.6 million USD, from 31.3 USD million a year ago.

Revenue rose to 964 USD million from 895 USD million in 2001. Acquisitions of Gloria Vanderbilt and teen-focused brand l.e.i. contributed revenue of 111 million USD for the fourth quarter, Jones said. Excluding these additions, revenues declined 5 percent for the fourth quarter. This year, the company introduces Bandolino apparel, Gloria Vanderbilt sportswear, Esprit footwear and handbags, and Gloria Vanderbilt footwear and handbags.

"It was an excellent quarter," said analyst Todd Slater. "It's a pre-eminent company in the space and well protected by the very meaningful diversification of its brand and categories it sells into, but it's not immune from the incredibly soft environment that's plaguing the consumer space." Last Tuesday, Jones warned that it could lose its license to produce a profitable line of clothes for Polo Ralph Lauren because of poor sales for another line it makes for the designer.

www.jny.com

February 7, 2003

Jones Apparel cutting over 2000 jobs

Clothing maker and retailer Jones Apparel Group announced on Thursday that it will take a fourth-quarter 2002 charge of 25.5 million USD to account for job cuts, facility closings and retail store conversions.

The Manhattan-based company says it has already eliminated 1,645 jobs, and plans to cut 455 more in the first half of 2003. The job cuts are at facilities that the company is closing: Sun Apparel plants in Mexico and warehouse and administrative facilities in El Paso, Texas.

Jones is also planning to re-brand 20 underperforming Enzo Angiolini shoe stores and change them to more reasonably priced Bandolino footwear stores. None of its New York City stores will be re-branded in the move, but the company says it will continue to evaluate its remaining 27 Enzo stores. Jones says the changes will not affect the Enzo Angiolini wholesale business.

January 18, 2003