The company posted net income of US$47.8 million, which was up 85% from US$25.8 million in the same period last year when it was hit by the sale of its Polo Jeans business but has been hit by the consolidation of Federated and Macy’s stores.

Sales rose slightly to US$1.25 billion from US$1.22 billion in what was a 13 week quarter, but ales at its retail chains were down 5.0% for the period, driven primarily its footwear stores where comparable sales slid by 12.3% with heavy promotional selling to clear excess inventory. Results were also disappointing in its moderate sportswear product lines.

The company now intends to exit or sell some of its ‘moderate product lines’ by the year end 2007, and although it did not name any brands, CEO Peter Boneparth said these lines would represent US$300 million in net revenue in 2007, with estimated combined operating margins in the low single-digit percentage range, but would not include its denim and junior divisions, which are also reported in the moderate segment and includes labels such as Gloria Vanderbilt, l.e.i., Energie, GLO, Jeanstar, Grane and others.

“Our continued strategic operational reviews and efforts to improve profitability, and the continued trend of our moderate customers toward differentiated product offerings, has led us to make the strategic decision to exit or sell some of our moderate product lines by year-end 2007,” said Jones Chief Executive Peter Boneparth.

Boneparth said those lines would represent US$300 million in net revenue in 2007, with estimated combined operating margins in the low single-digit percentage range.

Jones Apparel also slashed its 2007 earnings estimates to be between US$1.95 and US$2.05 per share. Previously, the company said it expected 2007 earnings would rise 10% from 2006 earnings of US$2.19 per share, implying earnings of US$2.41 per share. That forecast included $10 million in costs related to the launch of an Anne Klein collection.

“This guidance reflects a cautious forecast for our company-owned retail and outlet stores based on current trends and the potential operating impact of exiting ... moderate product lines,” said Boneparth.

Last year Jones Apparel put itself up for sale but then decided not to sell, but since then there has been continued speculation about Barneys in particular with the UK’s Arcadia chief Philip Green said to be eyeing up the store.