Stymied by an inert stock price, Jones Apparel CEO Peter Boneparth is reported to be considering the sale of luxury department store chain Barneys New York, the company's best-performing asset. Barney's is not yet on the market and Jones has declined to comment in advance of earnings, which will be reported Wednesday. The 2004 purchase of Barneys for $400 million was questioned by analysts as inconsistent with Jones's moderate portfolio, which includes Nine West and Gloria Vanderbilt. Barneys has thrived, however, vindicating Boneparth's advocacy of the high-end purchase. If Jones sells Barneys, it can use the proceeds to buy back stock, invest in brands or buy new ones. A sale could also, however, make Jones even more vulnerable to weakness in the moderate apparel sector. It would come at a difficult time for the company: Boneparth just fired Heather Pech, the head of the retail division; CFO Thimios Sotos resigned last month; and Boneparth himself has failed to reach a contract extension agreement with the company. Boneparth attempted last year to sell the whole company to a private equity firm, a move that ended ignominiously five months later when the auction was canceled due to insufficient bids.
Sources: Wall Street Journal
Commentary: Jones Apparel: Room to Grow -- Barron's • No Private Equity Suitors for Bally, Jones Apparel, Others
Stocks/ETFs to watch: Jones Apparel Group, Inc. (NYSE: JNY - News). Competitors: AnnTaylor Stores Corp. (NYSE: ANN - News), Liz Claiborne Inc. (NYSE: LIZ - News). ETFs: Retail HOLDRS ETF (AMEX: RTH - News), SPDR S&P Retail (AMEX: XRT - News), PowerShares Dynamic Retail (AMEX: PMR - News)
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