JONES APPAREL GROUP INC. $32 (New York symbol JNY; Aggressive Growth Portfolio, Consumer sector; WSSF Rating: Average) designs and markets a wide variety of men’s and women’s clothing and footwear. Major brands include Jones New York, Gloria Vanderbilt and Nine West.

Sales through department stores and specialty stores account for about two-thirds of Jones’s total revenue. The remaining third comes from its own retail operations of roughly 1,070 stores.

Jones’s revenues rose steadily, from $4.1 billion in 2001 to $5.1 billion in 2005. Profits grew from $2.31 a share (total $236.0 million) in 2001 to $2.84 a share ($385.2 million) in 2002.

Profits fell to $2.39 a share ($301.8 million) in 2004 after the company lost the license to make clothing under the ‘Lauren’ brand. Earnings in 2005 fell to $295.8 million. But per-share profits climbed to $2.48 as stock repurchases cut the number of shares outstanding.

In March 2006, the company began a strategic review of its operations, including putting the entire company up for sale. However, it did not receive what it considers sufficient offers. Jones now plans to focus on improving the profitability of its core businesses.

These include closing and consolidating its distribution warehouses, streamlining manufacturing and investing in new computerized information systems.

These moves will cost Jones between $70 million and $80 million. But they will save it $30 million in 2006, and $100 million a year starting in 2007. The changes should also make it easier for Jones to quickly adapt its products to take advantage of new fashion trends.

The stock got as high as $36 after the company put itself up for sale, but dropped to $27 in July. It now trades at 14.5 times its likely 2006 earnings of $2.21 a share, and at 0.8 times its sales of $41.80 a share. The stock may make only modest progress while the company restructures, but the $0.56 dividend seems safe, and yields 1.8%.

Jones Apparel Group is a buy.