2013 Compared with 2012
Revenues.
Total revenues for 2013 were $2.24 billion, compared with $2.20 billion for 2012, an increase of 1.9%. Revenues by segment were as follows:
|
|
(In millions)
|
|
2013
|
|
|
2012
|
|
|
Increase
(Decrease)
|
|
|
Percent
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholesale jeanswear
|
|
$
|
827.8
|
|
|
|
747.2
|
|
|
|
80.6
|
|
|
|
10.8
|
%
|
|
|
Wholesale footwear and accessories
|
|
|
1,003.5
|
|
|
|
1,023.2
|
|
|
|
(19.7
|
)
|
|
|
(1.9
|
)
|
|
|
Retail
|
|
|
359.0
|
|
|
|
377.8
|
|
|
|
(18.8
|
)
|
|
|
(5.0
|
)
|
|
|
Licensing
|
|
|
48.2
|
|
|
|
48.4
|
|
|
|
(0.2
|
)
|
|
|
(0.4
|
)
|
|
|
Total revenues
|
|
$
|
2,238.5
|
|
|
$
|
2,196.6
|
|
|
$
|
41.9
|
|
|
|
1.9
|
%
|
Wholesale jeanswear revenues increased $80.6 million, primarily due to increased shipments of our
Gloria Vanderbilt, l.e.i., Nine West Jeans, Jessica Simpson, Bandolino
and private label product lines resulting from positive product performance of both replenishment and fashion product at the retail level across our key customers. This was slightly offset by decreased shipments of our
Energie
product line due to poor retail performance.
Wholesale footwear and accessories revenues decreased $19.7 million. Footwear revenues decreased $31.7 million, primarily due to decreased shipments of the following footwear lines:
Enzo Angiolini, B Brian Atwood
and
Circa Joan & David
resulting from poor product performance
; Boutique 9, Joan & David, Jones New York, Rachel Rachel Roy
and
Gloria Vanderbilt
resulting from our decision to exit the footwear category of these brands;
Bandolino
due to the exit of a program with a customer in the value channel;
Mootsies Tootsies
due to the decision of a retail customer to exit the brand in 2012, and
Sam & Libby
due to the sale of the trademark in August 2012. Our
Nine West
international business decreased primarily from decreased shipments to our licensees in Asia, Canada, United Arab Emirates, Central and South America and South Africa and the exit of our licensee in Russia and Poland. These decreases were partially offset by increased value channel sales of our
Nine West
and
Anne Klein
footwear lines, an increase in sales to internet retailers of our
Nine West
footwear line, increased sales of our
Easy Spirit
and
Nine & Co
footwear lines due to strong performance at retail
,
shipments of our
Cloud 9
footwear lines, which launched in Fall 2012, increased shipments of product for our private label businesses, the wholesale launch of
Kurt Geiger
footwear in the United States in Fall 2013, and a full year of sales of the acquired
Brian Atwood
product line. Accessories revenues increased $12.0 million, primarily due to strong product performance of our
Anne Klein
and
Nine West
handbag lines, the launch of our
B Brian Atwood
handbags and our
Nine West, Napier, Givenchy
and
Anne Klein
jewelry lines resulting from positive product performance at the retail level. These increases were partially offset by a decrease in shipments of
Nine & Co
and
Rachel Rachel Roy
handbags resulting from our decision to exit this category for those brands.
Retail revenues decreased $18.8 million, primarily due to a net $19.7 million reduction related to our program to close underperforming locations and a 0.9% decrease in comparable store sales ($3.0 million), partially offset by $3.9 million in sales for new retail stores opened under the
Kurt Geiger
and
Brian Atwood
brands. We began the current period with 373 retail locations and had a net decrease of 69 locations to end the year with 304 locations. Our comparable e-commerce business sales increased 14.6% ($7.1 million) while our comparable footwear store sales decreased 3.5% ($10.1 million). Comparable stores are locations (including e-commerce sites) that have been open for a full year, are not scheduled to close in the current period and are not scheduled for a footprint expansion or downsize by more than 25% or relocation to a different street or mall.
Licensing revenues decreased $0.2 million, primarily due to decreased licensing revenue from
termination of our licenses with licensees in Poland and Russia and the repurchase of a footwear license from one our licensees in the fourth quarter of 2013.
Gross Profit.
The gross profit margins were 30.7% and 30.6% in 2013 and 2012, respectively.
Wholesale jeanswear gross profit margins were 24.4% and 24.0% for 2013 and 2012, respectively. The increase was primarily due to the mix of products sold as well as improved margins for certain brands due to lower production costs and/or increased wholesale prices for certain brands.
Wholesale footwear and accessories gross profit margins were 26.5% and 26.0% for 2013 and 2012, respectively. The increase was primarily due to lower sourcing and agent costs resulting from the mix of licensees in our
Nine West
international business and the mix of products sold.
Retail gross profit margins were 47.2% and 47.4% for 2013 and 2012, respectively. The decrease was primarily due to the mix of products sold.
Selling, General and Administrative Expenses.
SG&A expenses were $564.5 million and $574.1 million in 2013 and 2012, respectively.
Wholesale jeanswear SG&A expenses decreased $0.8 million, primarily due to a $4.0 million decrease in marketing and advertising expenses, a $1.1 million decrease in outside services due to lower fabric testing costs and a $0.4 million decrease in administrative expenses. These decreases were partially offset by a $2.5 million increase in compensation expense due to higher headcount to support revenue growth, a $0.8 million increase in royalties associated with the growth of the
Jessica Simpson
brand, a $0.7 million increase in distribution expenses driven by increased sales volume, and a $0.5 million increase in restricted stock amortization and $0.2 million of other net cost increases.
Wholesale footwear and accessories SG&A expenses decreased $25.2 million, primarily due to a net $16.6 million decrease in losses recorded related to future costs of leases on buildings we do not currently use, a $7.0 million reduction in compensation expenses (due to headcount reductions, the transfer of certain positions to our retail and licensing and other segments, as well as reduced pension expense), a $4.0 million net decrease in occupancy and depreciation expenses, a $2.1 million decrease in severance expense, a $1.8 million net decrease in advertising and marketing, a $1.2 million decrease in samples and $2.0 million of other net cost decreases. These decreases were partially offset by a $6.2 million decrease in support costs charged to other business units, a $2.6 million increase in administrative expenses and $0.7 million of expenses added as a result of the operating the Brian Atwood business for a full year.
Retail SG&A expenses increased $1.3 million, primarily due to a $6.0 million increase in operating costs for new retail stores opened under the
Kurt Geiger
and
Brian Atwood
brands, a $5.7 million increase in store-related asset impairment charges compared with the prior period, a $2.8 million increase in lease termination fees, $1.8 million due to the settlement of a legal matter, and $0.4 million in other net increases. These increases were partially offset by a net $10.2 million decrease in employee compensation and occupancy costs, a $4.0 million decrease in support costs from other business units and a $1.2 million loss on disposal of fixed assets in the prior year related to store closings.
SG&A expenses for the licensing and other segment increased $15.1 million, primarily due to a $4.8 million effect of unfavorable exchange rate differences between the U.S. Dollar and the British Pound and Canadian Dollar (primarily related to intercompany balances), a $4.5 million increase in corporate allocations from Jones, a $3.1 million gain on sale of a trademark in the prior year, $2.1 million increase in administrative expenses, $0.3 million decrease in advertising contribution payments from our licensees in 2013 and $0.3 million in other net increases.
Trademark and Goodwill Impairment Losses.
As a result of our annual trademark impairment analyses, we recorded trademark impairment charges of $7.2 million and $17.9 million in 2013 and 2012, respectively, as a result of decreases in projected revenues for certain brands. As a result of our annual goodwill impairment analysis, we recorded goodwill impairment charges of $3.2 million in 2013. For more information, see “Goodwill and Other Intangible Assets” in Notes to Consolidated Financial Statements.
Operating Income.
The resulting operating income for 2013 was $111.3 million, compared with $81.1 million for 2012, due to the factors described above.
2012 Compared with 2011
Revenues.
Total revenues for 2012 were $2.20 billion, compared with $2.19 billion for 2011, an increase of 0.3%. Revenues by segment were as follows:
|
|
(In millions)
|
|
2012
|
|
|
2011
|
|
|
Increase (Decrease )
|
|
|
Percent
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholesale jeanswear
|
|
$
|
747.2
|
|
|
|
776.9
|
|
|
|
(29.7
|
)
|
|
|
(3.8
|
%)
|
|
|
Wholesale footwear and accessories
|
|
|
1,023.2
|
|
|
|
939.4
|
|
|
|
83.8
|
|
|
|
8.9
|
|
|
|
Retail
|
|
|
377.8
|
|
|
|
421.3
|
|
|
|
(43.5
|
)
|
|
|
(10.3
|
)
|
|
|
Licensing
|
|
|
48.4
|
|
|
|
53.3
|
|
|
|
(4.9
|
)
|
|
|
(9.2
|
)
|
|
|
Total revenues
|
|
$
|
2,196.6
|
|
|
$
|
2,190.9
|
|
|
$
|
5.7
|
|
|
|
0.3
|
%
|
Wholesale jeanswear revenues decreased $29.7 million, primarily due to reduced shipments of our
l.e.i.
product line in the first half of 2012 (resulting from a challenging retail environment), our
Gloria Vanderbilt
and
Erika
product lines (resulting from the change in Penney’s retail strategy), our
Grane
product line (resulting from poor product performance at the retail level), our
Bandolino
product line (resulting from a change in retail strategy at Macy’s, Inc.) and our
Energie
product line (resulting from a continued challenging retail climate in the moderate junior zone and product assortment issues). These decreases were partially offset by increased shipments of our
Nine West
denim product line (resulting from additional club and special markets business) and our
Jessica Simpson
product line (resulting from positive product performance at the retail level and new product extensions).
Wholesale footwear and accessories revenues increased $83.8 million, primarily due to increased shipments of our
Nine West
and
AK Anne Klein
handbag and jewelry product lines (resulting from positive performance at the retail level and increase in our jewelry market share as a result of a competitor’s exit), the launch of our
B Brian Atwood
and
Rachel Roy
footwear product lines in fall 2011 and 2012, respectively, a $3.7 million increase in revenues from the acquired
Brian Atwood
business and increased shipments of our
Easy Spirit, Nine West, Bandolino, Enzo Angiolini, Anne Klein
and private label footwear product lines (all resulting from positive performance at the retail level). Sales in our
Nine West
international business increased $11.3 million, primarily due to increased sales in the Middle East, Turkey, and Canada. These increases were partially offset by reduced shipments of our
Mootsies Tootsies
and
Boutique 9
footwear product lines (resulting from poor performance at the retail level) and by the conversion of our children’s footwear wholesale business to a licensed business, where we now receive royalties.
Retail revenues decreased $43.5 million. Revenue decreases were the result of a net $33.3 million reduction in revenues primarily related to operating fewer stores in 2012 and a 2.8% decrease in comparable store sales ($10.2 million). We began 2012 with 438 retail locations and had a net decrease of 65 locations to end the period with 373 locations. Our comparable e-commerce business sales decreased 9.7% ($5.2 million) and our comparable footwear store sales decreased 1.6% ($5.0 million).
Licensing and other revenues decreased $4.9 million due to decreased sales volume of our licensees in certain segments of our licensed business and the effect of the discontinuance of the
Anne Klein New York
label on our international licensees.
Gross Profit.
The gross profit margins were 30.6% for both 2012 and 2011.
Wholesale jeanswear gross profit margins were 24.0% and 22.7% for 2012 and 2011, respectively. The increase was primarily due to the mix of products sold and improved inventory control.
Wholesale footwear and accessories gross profit margins were 26.0% and 25.7% for 2012 and 2011, respectively. The increase was primarily due to a higher amount of full-price sales in our jewelry business and the mix of products sold resulting from the Brian Atwood acquisition, partially offset by higher levels of markdown assistance in our jewelry product lines.
Retail gross profit margins were 47.4% and 47.6% for 2012 and 2011, respectively. The decrease was primarily due to the higher levels of promotional activity, partially offset by the mix of products sold resulting from the launch of the
Kurt Geiger
and
Brian Atwood
retail stores and lower freight costs.
Selling, General and Administrative Expenses.
SG&A expenses were $574.1 million and $595.6 million in 2012 and 2011, respectively.
Wholesale jeanswear SG&A expenses increased $0.9 million, primarily due to a $5.2 million increase in advertising and marketing expenses and a $2.4 million increase in samples expense and $0.4 million in other net increases. These increases were partially offset by a $4.6 million decrease in distribution expenses resulting from a decrease in the number of units sold, a $1.7 million reduction in compensation expense resulting from a reduced headcount and a $0.8 million decrease in administrative expenses.
Wholesale footwear and accessories SG&A expenses increased $9.5 million, primarily due to a $5.7 million increase in lease liabilities on buildings we do not occupy, $4.6 million in operating costs added as a result of the acquisition of Brian Atwood (including $1.1 million in amortization of acquired intangible assets), a $3.0 million increase in marketing and advertising expenses, a $1.9 million increase in administrative expenses, a $1.7 million loss on the disposal of a fixed asset, a $0.5 million net decrease in costs provided to other business units and $0.6 million of other net cost increases. These increases were partially offset by a $5.7 million decrease in compensation and benefit expenses (resulting from both a reduced headcount and a reduction in pension-related expenses), a $2.0 million decrease in depreciation expense resulting from assets becoming fully depreciated and a $0.8 million decrease in employee severance expense.
Retail SG&A expenses decreased $15.6 million, primarily due to an $9.3 million reduction in occupancy and depreciation expenses and a $7.5 million reduction in salaries and benefits (both primarily due to operating fewer stores in 2012), a $8.0 million decrease in store-related impairment losses compared with the prior period, a $4.3 million decrease in costs for services provided by other supporting business units, a $1.5 million reduction in credit and debit card fees (resulting from lower sales and a reduction in rates charged by our banks), a $0.5 million reduction in advertising expenses. These decreases were partially offset by an increase in our outside services of $6.1 million, $4.3 million in operating costs related to the opening of the new
Kurt Geiger
and
Brian Atwood
retail locations, a $2.5 million lease liability adjustment in the prior period and a $1.9 million write-off of settled merchandise credits in the prior period and $0.7 million of other net increases.
