Retailer and apparel-maker The Jones Group Inc. (NYSE:JNY) is at a crossroads. The company has too many brands, which has left it with little growth and declining retail sales. Jones Group is currently exploring a possible sale of the entire company or the divestment of individual brands. Several upcoming events could power shares higher and make the stock a buy.
Jones Group owns over 35 brands in six business segments. The segments include: designer, contemporary, better, bridge, moderate, and juniors. Popular brands from Jones Group include Nine West, Jones New York, and Anne Klein. At the end of 2012, Jones Group had 185 specialty retail stores and 409 outlet stores. Several of these under-performing locations are scheduled to be closed over the next two years.
Recently, The Jones Group Inc. (NYSE:JNY) announced the launch of its new QMack brand. The new clothing line, which will focus on millennial customers, will be sold exclusively at Macy’s, Inc. (NYSE:M) stores across the country. The line promises to allow customers to “mix and mack” tops and bottoms to create trendy outfits for the younger generation. Products will include blazers, mini-skirts, blouses, dresses, and cardigans.
Prices for the new line will range from $29 to $299, which represents a strong entry point that could appeal to a higher end millennial shopper. The company’s partnership with Macy’s, Inc. (NYSE:M) perfectly fits this price point and target customer. In fact, Macy’s turned to Jones Group to appeal to this demographic.
“When Macy’s approached us with the opportunity to create a new brand with a premiere placement on Macy’s, Inc. (NYSE:M) impulse floor, we saw this as an ideal occasion to combine our respective strengths and appeal to the millennial girl,” said Richard Dickson, president and CEO of Jones Group.
The brand has begun selling in 150 Macy’s, Inc. (NYSE:M) locations and online at macys.com, with more stores set to be added in the future. Jones Group will also feature the new brand in the September issue of Vogue magazine.
One option for The Jones Group Inc. (NYSE:JNY) to provide a boost to its stock price is to sell-off one or multiple brands. Jones Group owns over 35 brands, making it hard to focus on inventory and marketing for each individual business. This over-sized portfolio has also made it hard for the company to expand its international push.
In fiscal 2012, Nine West made up 24% of the company’s sales, while Jones New York made up 18% of last year’s sales. After that, the other brands make up small total percentages of sales and fail to differentiate themselves in importance. Nine West may be in for another strong year with a new fall lineup featuring 26 new pairs of shoes. The new lineup will be featured in the September issue of InStyle magazine.
Jones Group should keep its Nine West brand and work on selling-off other brands. Fifth & Pacific Companies Inc (NYSE:FNP) made a similar move. The former owner of Liz Claiborne sold its namesake brand to J.C. Penney Company, Inc. (NYSE:JCP) in an attempt to focus on strong-growing brands. Fifth & Pacific Companies Inc (NYSE:FNP) is now left with Juicy Couture, Lucky Brand, Kate Spade, and Adelington Design.