Jones's stock up on reports it's exploring a sale
NEW YORK (AP) — Jones Group's shares soared Monday amid media reports that the clothing and accessories maker is exploring a sale of the company.
THE SPARK: A media report says that The Jones Group Inc., which owns retail chains Nine West and Jones New York, has hired Citigroup to explore a potential sale of the company. It attributed the report to three anonymous sources who were familiar with the matter.
"Like most companies, The Jones Group has ongoing relationships with a wide range of advisors," the company said in an emailed statement to The Associated Press. "As a matter of practice, the company does not share the specifics of these relationships."
THE BACKGROUND: The speculation about a sale comes two months after Jones announced that it has named James A. Mitarotonda, chairman and chief executive of hedge fund firm Barington Capital Group, as a board member. Barington represents a group of investors that owns about 2.3 percent of Jones Group's common stock.
In April, Jones announced a series of actions aimed to improve profitability. The steps include closing 170 underperforming domestic stores by mid-2014. The goal is to operate a smaller and more productive chain of domestic locations, with outlet stores accounting for a higher percentage of the overall retail portfolio. The New York company is also reducing its total head count by about 8 percent.
Jones generated revenue of $3.79 billion in the calendar 2012 year. After struggling with sharp revenue declines during the Great Recession, Jones has seen business stabilize since then, but the recovery has been slow. Its business in Europe has been impacted by the financial crisis, and in the U.S., middle-income shoppers remain frugal.
SHARE ACTION: Shares rose more than 7 percent, or $1.04, to $15.68 in afternoon trading Monday. Shares have risen 42 percent since the beginning of the year. The stock has traded anywhere from $9.54 to $17.00 over the past 52 weeks.