Jones Strategic Plan Fails To Overcome The Impact OfRetail Consolidation

After failing to sell the company a few months ago, Peter Boneparth, CEO of the Jones Apparel Group, is moving forward with his “strategic plan” to cut costs, streamline pre-production operations and sourcing, strengthen the company’s wholesale brands and increase the retail presence of their retail stores which includes Barney’s.

In spite of these internal initiatives skeptical investors are wondering whether the company, can shake off the impact of Federated’s acquisition of the May Company and the severe loss of $12.3 million of operating profit from the Polo Jeans Company, (which was sold back to Polo Ralph Lauren).

The company believes it is headed in the right direction and is “seeing solid performance of their core apparel and footwear brands” but admit that they are “not immune from the many near-term uncertainties that continue to impact our distribution channel.”

Much like their close competitor, Liz Claiborne Inc., Jones is working hard to increase market share for their brands, provide exclusive brands for mass merchants and become less dependent on the few remaining department store chains that the need to work with. The most pressing issue’s for both companies is overcoming the impact of the wholesale channel consolidation, that is likely to continue and continued volatile consumer spending patterns.

Can Jones turn their negative earnings pattern around in 2007? Well, it looks like it may be more of a long-term proposition than the company would have you believe, but you can’t fault them for implementing a very aggressive strategic plan in today’s tough retail environment.