Jones Apparel Group, Inc. today reported results for the fourth quarter and full year 2003. Revenues increased to $980.1 million for the fourth quarter ended December 31, 2003, from $964.5 million for the fourth quarter of 2002. Revenues for the full year 2003 increased to $4.375 billion from $4.341 billion for the full year 2002. Earnings per share were $0.33 for the fourth quarter of 2003 as compared to $0.39 for the fourth quarter of 2002. Earnings per share increased to $2.48 for the full year 2003, as compared to $2.36 for the full year 2002.
Peter Boneparth, Chief Executive Officer, stated, #'We were very satisfied with our results during the quarter, particularly with the performance of our Retail segment, which generated a 3.7% comparable store sales increase and strong profitability. In addition, we successfully completed the previously announced Kasper acquisition during the quarter, which adds additional brand strength in key market segments to our portfolio.''
Wesley Card, Chief Operating and Financial Officer, commented, #'Our operating profit margin for the quarter was 8.1%, compared to 10.0% in the prior year. This decrease reflects the negative effects of exiting the Lauren by Ralph Lauren business (previously licensed from the Polo Ralph Lauren Corporation) of $33 million, thereby impacting the operating profit margin by 3 percentage points. It also includes the impact of the Kasper acquisition which, while adding approximately $22 million in net revenues, reduced operating income by $4.8 million primarily for non-cash purchase accounting adjustments for inventory and other acquired assets.''
Mr. Card added, #'Our inventory levels at December 31, 2003 were $590.6 million, compared to $529.6 million at December 31, 2002''. On a comparable basis, excluding Kasper inventory added as a result of the acquisition of Kasper in December 2003, inventory at year-end totaled $537.6 million, a 1.5% increase over the year-earlier period. Our accounts receivable were down slightly versus the prior year. When excluding Kasper, accounts receivable were down $26.7 million, or 6.9%. We ended the quarter with $1 billion of funded debt and, net of $350 million cash on hand, our debt to book capitalization ratio was 20.8%. During the quarter, the Company repurchased 490,000 shares of Company common stock in the open market at an aggregate cost of $16.6 million, or $33.83 per share.
#'Turning to our expectations for 2004, we remain comfortable with revenues in a range of $4.415 to $4.435 billion, and earnings per share in a range of $2.50 to $2.75 for the full year. This guidance incorporates the impact of redeeming our convertible debentures for $446.6 million, which occurred on February 2, 2004, and accretion resulting from the acquisition of Kasper,” continued Mr. Card. “Operating margins are projected in a range of 12.6% to 13.6%. Including Kasper, we are raising our operating cash flow guidance to $450 million, exceeding 10% of net sales. Looking to the first quarter of 2004, given our exit from the Lauren business, we anticipate revenues being down mid single digits and, incorporating the non-cash purchase accounting effect related to Kasper and the non-cash write-off of financing fees and original bond discount attributable to the redemption of our convertible debentures, earnings per share are expected to be in a range of $0.55 – $0.60. In the second quarter we believe net revenues should increase mid single digits, resulting in an earnings per share range of $0.55 – $0.60.''
Mr. Boneparth concluded, #'With several economic indicators trending in a positive direction, generally improved retailer performances, and a consumer shift toward more structured and career-oriented dressing, we enter 2004 optimistic about our future. We're also very encouraged about our new apparel launches led by Jones New York Signature, as well as Bandolino and the fall debut of A|Line. Our footwear and accessories businesses have many initiatives planned for 2004 harnessing the power of our brands and operational excellence. Integration efforts of Kasper are on schedule and the merchandising and design teams have completed a comprehensive re-launch of the well-known Anne Klein brand, which was reviewed with our key customers last week. While 2003 presented us with many challenges, we are proud of our performance and have remained disciplined in the execution of our multi-brand, multi-channel business model that emphasizes diversification and balance across all core competencies. The underlying infrastructure of our Company is very scalable and supported by a strong balance sheet along with an industry- leading operating cash flow. In closing, we reiterate that our 2004 earnings per share guidance is prior to further acquisitions or future financial transactions.''