10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 4, 2008

OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number 1-10746

JONES APPAREL GROUP, INC.
(Exact name of registrant as specified in its charter)

Pennsylvania (State or other jurisdiction of incorporation or organization)	06-0935166 (I.R.S. Employer Identification No.)
1411 Broadway New York, New York (Address of principal executive offices)	10018 (Zip Code)

(212) 642-3860
(Registrant's telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [X] Accelerated filer [   ] Non-accelerated filer [   ] Smaller reporting company [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes [   ] No [X]

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class of Common Stock
$.01 par value Outstanding at October 28, 2008
83,426,247

JONES APPAREL GROUP, INC.

Index		Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
	Consolidated Balance Sheets     October 4, 2008, October 6, 2007 and December 31, 2007	3
	Consolidated Statements of Operations     Fiscal Quarters and Nine Months ended October 4, 2008 and October 6, 2007	4
	Consolidated Statements of Stockholders' Equity     Fiscal Nine Months ended October 4, 2008 and October 6, 2007	5
	Consolidated Statements of Cash Flows     Fiscal Nine Months ended October 4, 2008 and October 6, 2007	6
	Notes to Consolidated Financial Statements	7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		20
Item 3. Quantitative and Qualitative Disclosures About Market Risk		30
Item 4.  Controls and Procedures		30
PART II. OTHER INFORMATION
Item 1. Legal Proceedings		31
Item 5. Other Information		31
Item 6. Exhibits		31
Signatures		32
Exhibit Index		33

DEFINITIONS

        As used in this Report, unless the context requires otherwise, "our," "us" and "we" means Jones Apparel Group, Inc. and consolidated subsidiaries, "Barneys" means Barneys New York, Inc., "Polo" means Polo Ralph Lauren Corporation, "GRI" means GRI Group Limited, "FASB" means the Financial Accounting Standards Board, "SFAS" means Statement of Financial Accounting Standards and "SEC" means the United States Securities and Exchange Commission.

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Jones Apparel Group, Inc. 
Consolidated Balance Sheets (Unaudited)
(All amounts in millions, except per share data)
  

		October 4, 2008	October 6, 2007	December 31, 2007
ASSETS
CURRENT ASSETS:
	Cash and cash equivalents	$ 200.3	$  109.0	$ 302.8
	Accounts receivable	474.6	505.9	337.0
	Inventories	547.9	590.3	523.9
	Prepaid income taxes	7.8	-	30.6
	Deferred taxes	25.4	57.3	33.9
	Prepaid expenses and other current assets	57.8	63.6	65.9
	TOTAL CURRENT ASSETS	1,313.8	1,326.1	1,294.1
PROPERTY, PLANT AND EQUIPMENT, at cost, less accumulated depreciation and amortization of $467.9, $433.3 and $439.7		306.7	297.5	312.1
GOODWILL		973.9	1,051.9	973.9
OTHER INTANGIBLES, at cost, less accumulated amortization		616.7	626.1	618.0
DEFERRED TAXES		-	6.3	-
OTHER ASSETS		56.6	53.8	38.5
		$ 3,267.7	$ 3,361.7	$ 3,236.6
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
	Current portion of capital lease obligations	$ 3.5	$  4.5	$  4.8
	Accounts payable	222.9	190.9	223.6
	Income taxes payable	15.2	55.5	20.4
	Accrued employee compensation and benefits	35.8	43.2	40.2
	Accrued restructuring and severance payments	12.8	21.3	23.0
	Accrued expenses and other current liabilities	83.8	101.4	83.6
	TOTAL CURRENT LIABILITIES	374.0	416.8	395.6
NONCURRENT LIABILITIES:
	Long-term debt	749.4	749.4	749.4
	Obligations under capital leases	30.0	29.6	28.3
	Deferred taxes	19.8	-	-
	Other	68.7	72.3	66.5
	TOTAL NONCURRENT LIABILITIES	867.9	851.3	844.2
	TOTAL LIABILITIES	1,241.9	1,268.1	1,239.8
COMMITMENTS AND CONTINGENCIES		-	-	-
STOCKHOLDERS' EQUITY:
	Preferred stock, $.01 par value - shares authorized 1.0;  none issued	-	-	-
	Common stock, $.01 par value - shares authorized 200.0; issued 154.9, 153.5 and 153.6	1.5	1.5	1.5
	Additional paid-in capital	1,349.4	1,257.9	1,339.7
	Retained earnings	2,502.5	2,582.6	2,480.8
	Accumulated other comprehensive (loss) income	(1.3)	(1.4)	2.1
	Treasury stock, 71.5, 65.8 and 68.3 shares, at cost	(1,826.3)	(1,747.0)	(1,827.3)
	TOTAL STOCKHOLDERS' EQUITY	2,025.8	2,093.6	1,996.8
		$ 3,267.7	$ 3,361.7	$ 3,236.6

See accompanying notes to consolidated financial statements

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Jones Apparel Group, Inc. 
Consolidated Statements of Operations (Unaudited) 
(All amounts in millions, except per share data)
  

		Fiscal Quarter Ended		Fiscal Nine Months Ended
		October 4, 2008	October 6, 2007	October 4, 2008	October 6, 2007
Net sales		$ 948.6	$ 1,011.8	$ 2,732.2	$ 2,970.8
Licensing income		16.0	15.4	36.5	36.8
Service and other revenue		0.1	0.4	0.8	2.3
Total revenues		964.7	1,027.6	2,769.5	3,009.9
Cost of goods sold		641.4	701.1	1,843.2	2,028.1
Gross profit		323.3	326.5	926.3	981.8
Selling, general and administrative expenses		271.5	286.2	809.1	831.2
Trademark impairments		-	11.5	-	80.5
Reversal of losses on assets held for sale		-	30.4	-	-
Operating income		51.8	59.2	117.2	70.1
Interest income		1.6	1.0	6.3	1.7
Interest expense and financing costs		12.1	13.7	36.3	41.7
Gain on sale of interest in Australian joint venture		-	-	0.8	-
Equity in (loss) earnings of unconsolidated affiliates		(0.4)	1.0	(0.4)	3.1
Income from continuing operations before provision for income taxes		40.9	47.5	87.6	33.2
Provision (benefit) for income taxes		14.6	(90.9)	31.1	(98.5)
Income from continuing operations		26.3	138.4	56.5	131.7
Income from discontinued operations, net of tax		1.0	261.7	1.0	269.2
Net income		$ 27.3	$ 400.1	$ 57.5	$ 400.9
Earnings per share
Basic
	Income from continuing operations	$ 0.32	$ 1.39	$ 0.68	$ 1.26
	Income from discontinued operations	0.01	2.62	0.01	2.57
	Basic earnings per share	$ 0.33	$ 4.01	$ 0.69	$ 3.83
Diluted
	Income from continuing operations	$ 0.32	$1.37	$ 0.67	$1.24
	Income from discontinued operations	0.01	2.60	0.01	2.53
	Basic earnings per share	$ 0.33	$3.97	$ 0.68	$3.77
Weighted average common shares and share equivalents outstanding
Basic		81.6	99.7	83.4	104.6
Diluted		83.0	100.7	84.4	106.3
Dividends declared per share		$0.14	$0.14	$0.42	$0.42

See accompanying notes to consolidated financial statements

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Jones Apparel Group, Inc.
Consolidated Statements of Stockholders' Equity (Unaudited)
(All amounts in millions, except per share data)
  

		Number of common shares outstanding	Total stock- holders' equity	Common stock	Additional paid-in capital	Retained earnings	Accumu- lated  other compre- hensive income (loss)	Treasury stock
Balance, January 1, 2007		107.9	$ 2,211.6	$ 1.5	$ 1,320.0	$ 2,226.4	$ (5.9)	$ (1,330.4)
Fiscal nine months ended October 6, 2007:
Comprehensive income:
	Net income	-	400.9	-	-	400.9	-	-
	Change in fair value of cash flow hedges, net of $1.7 tax	-	(2.4)	-	-	-	(2.4)	-
	Reclassification adjustment for hedge gains and losses included in net income, net of $0.1 tax	-	(0.4)	-	-	-	(0.4)	-
	Foreign currency translation adjustments	-	7.3	-	-	-	7.3	-
	Total comprehensive income		405.4
Forfeitures of restricted stock held by employees, net of issuances		(0.2)	-	-	-	-	-	-
Amortization expense in connection with employee stock options and restricted stock		-	5.5	-	5.5	-	-	-
Exercise of employee stock options		0.5	11.1	-	11.1	-	-	-
Excess tax benefits from share-based payment arrangements		-	1.6	-	1.6	-	-	-
Dividends on common stock ($0.42 per share)		-	(45.3)	-	-	(45.3)	-	-
Treasury stock acquired		(20.5)	(496.9)	-	(80.3)	-	-	(416.6)
Other		-	0.6	-	-	0.6	-	-
Balance, October 6, 2007		87.7	$ 2,093.6	$ 1.5	$ 1,257.9	$ 2,582.6	$ (1.4)	$ (1,747.0)
Balance, January 1, 2008		$ 85.3	$ 1,996.8	$ 1.5	$ 1,339.7	$ 2,480.8	$ 2.1	$ (1,827.3)
Fiscal nine months ended October 4, 2008
Comprehensive income:
	Net income	-	57.5	-	-	57.5	-	-
	Change in fair value of cash flow hedges, net of $0.3 tax benefit	-	0.4	-	-	-	0.4	-
	Reclassification adjustment for hedge gains and losses included in net income, net of $0.4 tax benefit	-	0.7	-	-	-	0.7	-
	Foreign currency translation adjustments	-	(4.5)	-	-	-	(4.5)	-
	Total comprehensive income		54.1
Issuance of restricted stock to employees, net of forfeitures		1.3	-	-	-	-	-	-
Amortization expense in connection with employee stock options and restricted stock		-	11.0	-	11.0	-	-	-
Treasury stock acquired		(3.2)	1.0	-	-	-	-	1.0
Exercise of employee stock options		-	0.1	-	0.1	-	-	-
Excess tax benefits from share-based payment arrangements		-	(1.4)	-	(1.4)	-	-	-
Dividends on common stock ($0.42 per share)		-	(35.8)	-	-	(35.8)	-	-
Balance, October 4, 2008		83.4	$ 2,025.8	$ 1.5	$ 1,349.4	$ 2,502.5	$ (1.3)	$ (1,826.3)

See accompanying notes to consolidated financial statements

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Jones Apparel Group, Inc. 
Consolidated Statements of Cash Flows (Unaudited) 
(All amounts in millions)
  

			Fiscal Nine Months Ended
			October 4, 2008	October 6, 2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income			$ 57.5	$ 400.9
Less: income from discontinued operations			(1.0)	(269.2)
Income from continuing operations			$56.5	131.7
Adjustments to reconcile net income from continuing operations to net cash provided by (used in) operating activities, net of acquisitions and divestitures:
	Amortization expense in connection with employee stock options and restricted stock		11.0	12.3
	Depreciation and other amortization		61.7	55.9
	Trademark impairments		-	80.5
	Equity in earnings of unconsolidated affiliates		0.4	(3.1)
	Provision for losses on accounts receivable		8.7	2.3
	Deferred taxes		28.9	(18.4)
	Other items, net		1.1	1.1
	Changes in operating assets and liabilities:
		Accounts receivable	(147.1)	(148.5)
		Inventories	(25.4)	(56.7)
		Prepaid expenses and other current assets	7.5	8.4
		Other assets	(0.4)	0.9
		Accounts payable	(0.7)	(88.0)
		Income taxes payable/prepaid income taxes	15.3	(107.7)
		Accrued expenses and other current liabilities	(11.8)	17.7
		Other liabilities	2.2	0.1
		Total adjustments	(48.6)	(243.2)
	Net cash provided by (used in) operating activities of continuing operations		7.9	(111.5)
	Net cash provided by operating activities of discontinued operations		-	38.9
	Net cash provided by (used in) operating activities		7.9	(72.6)
CASH FLOWS FROM INVESTING ACTIVITIES:
	Proceeds from sale of Barneys, net of cash sold and selling costs		-	858.7
	Capital expenditures		(56.8)	(79.0)
	Investment in GRI		(20.2)	-
	Acquisition-related costs		(0.2)	-
	Proceeds from sales of assets		7.3	2.8
	Net cash (used in) provided by investing activities of continuing operations		(69.9)	782.5
	Net cash used in investing activities of discontinued operations		-	(40.5)
	Net cash (used in) provided by investing activities		(69.9)	742.0
CASH FLOWS FROM FINANCING ACTIVITIES:
	Net repayments under credit facilities		-	(100.0)
	Principal payments on capital leases		(3.6)	(2.9)
	Purchases of treasury stock		1.0	(496.9)
	Dividends paid		(35.8)	(45.3)
	Proceeds from exercise of employee stock options		0.1	11.1
	Net cash advances to discontinued operations		-	(21.8)
	Repayment of acquired debt		(0.2)	-
	Excess tax benefits from share-based payment arrangements		-	2.4
	Net cash used in financing activities of continuing operations		(38.5)	(653.4)
	Net cash provided by financing activities of discontinued operations		-	18.0
	Net cash used in financing activities		(38.5)	(635.4)
EFFECT OF EXCHANGE RATES ON CASH			(2.0)	3.5
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS			(102.5)	37.5
CASH AND CASH EQUIVALENTS, BEGINNING, including $7.2 reported under assets held for sale in 2007			302.8	71.5
CASH AND CASH EQUIVALENTS, ENDING			$ 200.3	$ 109.0

See accompanying notes to consolidated financial statements

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JONES APPAREL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

BASIS OF PRESENTATION

        The consolidated financial statements include the accounts of Jones Apparel Group, Inc. and its subsidiaries. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information and in accordance with the requirements of Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and the footnotes thereto included within our Annual Report on Form 10-K.

        In accordance with the provisions of SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," the results of operations of Barneys have been reported as discontinued operations. We classify as discontinued operations for all periods presented any component of our business that we believe is probable of being sold or has been sold that has operations and cash flows that are clearly distinguishable operationally and for financial reporting purposes. For those components, we have no significant continuing involvement after disposal and their operations and cash flows are eliminated from our ongoing operations.

        In our opinion, the information presented reflects all adjustments necessary for a fair statement of interim results. All such adjustments are of a normal and recurring nature. Certain reclassifications have been made to conform prior year data with the current presentation. The foregoing interim results are not necessarily indicative of the results of operations for the full year ending December 31, 2008.

ACCOUNTS RECEIVABLE

        Accounts receivable consist of the following:

(In millions)	October 4, 2008	October 6, 2007	December 31, 2007
Trade accounts receivable	$ 519.9	$ 545.7	$ 365.5
Allowances for doubtful accounts, returns, discounts and co-op advertising	(45.3)	(39.8)	(28.5)
	$ 474.6	$ 505.9	$ 337.0

INVENTORIES

        Inventories are summarized as follows:

(In millions)	October 4, 2008	October 6, 2007	December 31, 2007
Raw materials	$ 0.6	$ 0.9	$ 0.3
Work in process	-	5.5	1.5
Finished goods	547.3	583.9	522.1
	$ 547.9	$ 590.3	$ 523.9

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EARNINGS PER SHARE

        The computation of basic and diluted earnings per share is as follows:

		Fiscal Quarter Ended		Fiscal Nine Months Ended
(In millions, except per share amounts)		October 4, 2008	October 6, 2007	October 4, 2008	October 6, 2007
Income from continuing operations		$ 26.3	$ 138.4	$ 56.5	$ 131.7
Income from discontinued operations		1.0	261.7	1.0	269.2
Net income		$ 27.3	$ 400.1	$ 57.5	$ 400.9
Weighted average common shares outstanding - basic		81.6	99.7	83.4	104.6
Effect of dilutive employee stock options and restricted stock		1.4	1.0	1.0	1.7
Weighted average common shares and share equivalents outstanding - diluted		83.0	100.7	84.4	106.3
Earnings per share - basic
	Income from continuing operations	$ 0.32	$ 1.39	$ 0.68	$ 1.26
	Income from discontinued operations	0.01	2.62	0.01	2.57
	Basic earnings per share	$ 0.33	$ 4.01	$ 0.69	$ 3.83
Earnings per share - diluted
	Income from continuing operations	$ 0.32	$ 1.37	$ 0.67	$ 1.24
	Income from discontinued operations	0.01	2.60	0.01	2.53
	Diluted earnings per share	$ 0.33	$ 3.97	$ 0.68	$3.77

TRADEMARK IMPAIRMENTS

        On May 1, 2007, we made the strategic decision to exit or sell some of our moderate product lines by year end 2007 as a result of the continued trend of our moderate customers towards differentiated product offerings. As a result of this exit, we renamed our wholesale moderate apparel segment as our wholesale jeanswear segment to better reflect the products we produce in that segment. We believed that exiting these product lines would strengthen our future operating results and allow us to focus primarily on growth opportunities in our remaining wholesale product lines, which operate at substantially higher margins. This decision did not impact our denim and junior division labels such as Gloria Vanderbilt, l.e.i., Energie, GLO, Jeanstar, Grane and others, which are also reported in the wholesale jeanswear segment. As a result of the loss of these projected revenues, we recorded impairments for our Norton McNaughton and Erika trademarks of $80.5 million during the fiscal nine months ended October 6, 2007.

DISCONTINUED OPERATIONS

        On September 6, 2007, we completed the sale of Barneys to an affiliate of Istithmar PJSC. In the fiscal quarter ended October 6, 2007, we recognized a net after-tax gain on the sale of $258.2 million, which was subject to certain working capital adjustments. In the fiscal quarter ended December 31, 2007, we adjusted this after-tax gain downward by $4.0 million to account for the final working capital adjustment. In the fiscal nine months ended October 4, 2008, we reached final settlement on certain liabilities remaining from the sale, resulting in an additional after-tax gain of $1.0 million. In accordance with the provisions of SFAS No. 144, the results of operations of Barneys have been reported as discontinued operations. Operating results of Barneys for the fiscal quarter and nine months ended October 6, 2007, which were formerly included in our retail segment, are summarized as follows:

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	Fiscal Quarter Ended		Fiscal Nine Months Ended
(In millions)	October 4, 2008	October 6, 2007	October 4, 2008	October 6, 2007
Total revenues	$ -	$ 113.2	$ -	$ 452.1
Income from operations of Barneys before provision for income taxes	$ -	$ 6.4	$ -	$ 22.0
Provision for income taxes	-	2.9	-	11.0
Income from operations of Barneys	-	3.5	-	11.0
Gain on sale of Barneys before provision for income taxes1	1.5	395.8	1.5	395.8
Provision for income taxes	0.5	137.6	0.5	137.6
Gain on sale of Barneys	1.0	258.2	1.0	258.2
Income from discontinued operations	$ 1.0	$ 261.7	$ 1.0	$ 269.2

        ¹ Amounts reported for 2007 are net of $247.4 million of goodwill allocated to Barneys.

        We allocated $1.5 million and $5.5 million of interest expense to discontinued operations for the fiscal quarter and nine months ended October 6, 2007, respectively, based on the weighted-average monthly borrowing rate under our senior credit facilities applied to the average net monthly balance of funds that had been advanced to Barneys.

ACCRUED RESTRUCTURING COSTS

        On September 12, 2006, we announced the closing of certain El Paso, Texas and Mexican operations related to the decision by Polo to discontinue the Polo Jeans Company product line (the "manufacturing restructuring"), which we produced for Polo subsequent to the sale of the Polo Jeans Company business to Polo in February 2006. In connection with the closings, we incurred $7.0 million of one-time termination benefits and associated employee costs for 1,838 employees and $1.4 million of other costs. Of this amount, $2.8 million has been recorded as a selling, general and administrative expense and $5.6 million was recorded as cost of sales in the wholesale jeanswear segment. At that time, we determined the estimated fair value of the property, plant and equipment employed in Mexico was less than its carrying value. As a result, we recorded an impairment loss of $8.6 million, which was reported as cost of sales in the wholesale jeanswear segment in 2006. The closings were substantially completed by the end of March 2007. On May 8, 2008, we sold the Mexican operations for $5.9 million, resulting in a gain of $0.2 million.

        In connection with the exit and reorganization of certain moderate apparel product lines, we decided to close certain New York offices, and on October 9, 2007, we announced the closing of warehouse facilities in Goose Creek, South Carolina. We recorded $8.9 million of one-time termination benefits and associated employee costs for approximately 440 employees and $0.8 million of lease obligations. These closings were substantially complete by the end of February 2008.

        On October 17, 2007, we announced the closing of warehouse facilities in Edison, New Jersey. We recorded $3.3 million of one-time termination benefits and associated employee costs for approximately 160 employees. The closing was substantially complete by the end of June 2008.

        The accruals of restructuring costs and liabilities, of which $3.4 million and $7.1 million are included in accrued restructuring and severance payments and $1.2 million and $1.2 million are included in other noncurrent liabilities at October 4, 2008 and October 6, 2007, respectively, are as follows:

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(In millions)	Severance and other employee costs	Closing of retail stores and consolidation of facilities	Manufacturing restructuring	Total
Balance, January 1, 2007	$ 1.4	$ 1.6	$ 3.4	$ 6.4
Net additions	6.7	-	1.6	8.3
Payments and reductions	(2.3)	(0.4)	(3.7)	(6.4)
Balance, October 6, 2007	$ 5.8	$ 1.2	$ 1.3	$ 8.3
Balance, January 1, 2008	$ 8.7	$ 1.1	$ 1.2	$ 11.0
Net additions (reversals)	0.1	0.8	(0.1)	0.8
Payments and reductions	(6.3)	(0.5)	(0.4)	(7.2)
Balance, October 4, 2008	$ 2.5	$ 1.4	$ 0.7	$ 4.6

        Estimated severance payments and other employee costs of $2.5 million accrued at October 4, 2008 relate to the remaining estimated severance and related costs for 187 employees at locations closed or to be closed. Employee groups affected (totaling approximately 770 employees) include administrative, warehouse and management personnel. During the fiscal nine months ended October 4, 2008 and October 6, 2007, $6.3 million and $2.3 million, respectively, of the reserve was utilized (relating to partial or full severance and related costs for 431 and 524 employees, respectively).

        The $0.1 million net addition during the fiscal nine months ended October 4, 2008 is related to the exit from and reorganization of certain moderate apparel product lines, which is reported as a $0.4 million selling, general and administrative expense in the wholesale jeanswear segment and a $0.3 million reversal of selling, general and administrative expenses in the wholesale better apparel segment.

        During the fiscal nine months ended October 6, 2007, we recorded $6.7 million of severance and related costs relating to the exit from and reorganization of certain moderate apparel product lines as a selling, general and administrative expense in the wholesale jeanswear segment and $0.1 million of severance and related costs relating to the closing of our Anne Klein retail locations as a selling, general and administrative expense in the retail segment.

        The $1.4 million accrued at October 4, 2008 for the consolidation of facilities relates to expected costs to be incurred, including lease obligations, for closing certain acquired facilities in connection with consolidating their operations into our other existing facilities. During the fiscal nine months ended October 6, 2007, we recorded $0.8 million relating to the remaining lease obligations for one of the closed warehouse facilities in Goose Creek, South Carolina as a selling, general and administrative expense in the wholesale jeanswear segment.

        The details of the manufacturing restructuring accruals are as follows:

(In millions)	One-time termination benefits	Other associated costs	Total manufacturing restructuring
Balance, January 1, 2007	$ 2.8	$ 0.6	$ 3.4
Additions	1.0	0.6	1.6
Payments and reductions	(3.4)	(0.3)	(3.7)
Balance, October 6, 2007	$ 0.4	$ 0.9	$ 1.3
Balance, January 1, 2008	$ 0.3	$ 0.9	$ 1.2
Net reversals	(0.1)	-	(0.1)
Payments and reductions	(0.1)	(0.3)	(0.4)
Balance, October 4, 2008	$ 0.1	$ 0.6	$ 0.7

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        The $0.7 million accrued at October 4, 2008 represents $0.1 million of one-time termination benefits for three employees and $0.6 million of legal fees and related costs. During the fiscal nine months ended October 4, 2008 and October 6, 2007, $0.1 million and $3.4 million, respectively, of the termination benefits reserve was utilized (relating to partial or full severance for one and 122 employees, respectively).

        Of the $1.6 million addition recorded in the fiscal nine months ended October 6, 2007, $1.0 million was recorded as cost of sales and $0.6 million was recorded as a selling, general and administrative expense in the wholesale jeanswear segment. The $0.1 million net reversal in the fiscal nine months ended October 4, 2008 was recorded as a reduction of selling, general and administrative expenses in the wholesale jeanswear segment.

        Additional restructuring costs may result as we continue to evaluate and assess the impact of duplicate responsibilities, warehouses and office locations. Any additional costs will be charged to operations in the period in which they occur.

CREDIT FACILITIES

        Prior to June 6, 2008, we had credit agreements with several lending institutions to borrow an aggregate principal amount of up to $1.75 billion under Senior Credit Facilities. These facilities, consisting of a $1.0 billion five-year revolving credit facility expiring in June 2009 and a $750.0 million five-year revolving credit facility expiring in June 2010, could be used for letters of credit or cash borrowings . On June 6, 2008, we amended these facilities. The terms and conditions of the credit facilities remain substantially unchanged, except for modification of the pricing provisions and certain covenants and reduction of the aggregate commitment under the $1.0 billion facility to $500.0 million. At October 4, 2008, $195.7 million of letters of credit were outstanding under the credit facility that expires in June 2009 and no amounts were outstanding under the credit facility that expires in June 2010. Borrowings under the Senior Credit Facilities may also be used for working capital and other general corporate purposes, including permitted acquisitions and stock repurchases. The amended Senior Credit Facilities are unsecured and require us to satisfy a minimum Interest Coverage Ratio, a maximum Covenant Debt to EBITDA Ratio and a minimum Asset Coverage Ratio (each as defined in the Restated Credit Agreements), and contain covenants limiting our ability to (1) incur debt and guaranty obligations, (2) incur liens, (3) make loans, advances, investments and acquisitions, (4) merge or liquidate, (5) sell or transfer assets, (6) pay dividends, repurchase shares, or make distributions to stockholders, and (7) engage in transactions with affiliates.  At October 4, 2008, we were in compliance with all of our covenants.

        At October 4, 2008, we also had uncommitted unsecured lines of credit available for up to $106.6 million of letters of credit, under which an aggregate of $21.5 million was outstanding. At October 4, 2008, we also had a C$10.0 million unsecured line of credit in Canada, under which C$0.2 million of letters of credit were outstanding.

FAIR VALUES

        We adopted SFAS No. 157, "Fair Value Measurements," on January 1, 2008. SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework, creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements, and details the disclosures that are required for items measured at fair value. Under SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities," entities are permitted to choose to measure many financial instruments and certain other items at fair value. We did not elect the fair value measurement option under SFAS No. 159 for any of our financial assets or liabilities

        We have several financial instruments that must be measured under the new fair value standard, including derivatives, the assets and liabilities of the Jones Apparel Group, Inc. Deferred Compensation Plan (the "Rabbi Trust") and deferred director fees that are valued based on the quoted market price of our common stock. We currently do not have non-financial assets and non-financial liabilities that are required to be measured at fair value on a recurring basis. Our financial assets and liabilities are to be measured using inputs from the three levels of the fair value hierarchy, which are as follows:

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• Level 1 - inputs are unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date;
   

• Level 2 - inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs); and
   

• Level 3 - unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing assets or liabilities based on the best information available.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

        In accordance with the fair value hierarchy described above, the following table shows the fair value of our financial assets and liabilities that are required to be measured at fair value on a recurring basis at October 4, 2008.

(In millions)       Description	Classification	Value at October 4, 2008	Quoted prices in active markets for identical assets (Level 1)	Significant other observable inputs (Level 2)	Significant unobservable inputs (Level 3)
Rabbi Trust assets	Other current assets	$ 7.7	$ 7.7	$ -	$ -
	Total assets	$ 7.7	$ 7.7	$ -	$ -
Rabbi Trust liabilities	Accrued employee compensation and benefits	$ 7.7	$ 7.7	$ -	$ -
Derivatives	Accrued expenses and other current liabilities	-	-	-	-
Deferred director fees	Accrued expenses and other current liabilities	0.6	0.6	-	-
	Total liabilities	$ 8.3	$ 8.3	$ -	$ -

STATEMENT OF CASH FLOWS

Fiscal Nine Months Ended: (In millions)	October 4, 2008	October 6, 2007
Supplemental disclosures of cash flow information for continuing operations:
Cash paid (received) during the period for:
Interest	$ 23.5	$ 29.5
Net income tax (refunds) payments	(15.9)	37.6
Supplemental disclosures of non-cash investing and financing activities for continuing operations:
Property and equipment acquired through capital lease financing	3.7	3.9
Restricted stock issued to employees	20.3	18.7

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DERIVATIVES

        SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," subsequently amended by SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities" and SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities" (as amended, hereinafter referred to as "SFAS 133"), establishes accounting and reporting standards for derivative instruments. Specifically, SFAS 133 requires us to recognize all derivatives as either assets or liabilities on the balance sheet and to measure those instruments at fair value. Additionally, the fair value adjustments will affect either stockholders' equity or net income, depending on whether the derivative instrument qualifies as a hedge for accounting purposes and, if so, the nature of the hedging activity.

        We are exposed to market risk related to changes in foreign currency exchange rates. We have assets and liabilities denominated in certain foreign currencies, and our Canadian subsidiary purchases a portion of its inventory from suppliers who require payment in U.S. Dollars. To minimize our exposure to changes in exchange rates between the Canadian Dollar and the U.S. Dollar, we hedge a portion of our forecasted Canadian U.S. Dollar-denominated inventory purchases. Changes in fair values of these currency hedges, which we designate as cash flow hedges, are deferred and recorded as a component of accumulated other comprehensive income until the associated hedged transactions impact the statement of operations, at which time the deferred gains and losses are reclassified to cost of sales. At October 4, 2008, we had outstanding foreign exchange contracts to exchange Canadian Dollars for a notional total of US$4.4 million through December 2008. At October 4, 2008, these contracts had no fair value.

        We reclassified $1.1 million of pre-tax losses and $0.1 million of pre-tax gains from foreign currency exchange contracts to cost of sales during the fiscal nine months ended October 4, 2008 and October 6, 2007, respectively. There has been no material ineffectiveness related to our foreign currency exchange contracts as the instruments are designed to be highly effective in offsetting losses and gains on transactions being hedged. If foreign currency exchange rates do not change from their October 4, 2008 amounts, we estimate that any reclassifications from other comprehensive income to earnings within the next 12 months also will not be material. The actual amounts that will be reclassified to earnings over the next 12 months could vary, however, as a result of changes in market conditions.

PENSION PLANS

Components of Net Periodic Benefit Cost

	Fiscal Quarter Ended		Fiscal Nine Months Ended
(In millions)	October 4, 2008	October 6, 2007	October 4, 2008	October 6, 2007
Interest cost	$ 0.7	$ 0.6	$ 2.0	$ 1.9
Expected return on plan assets	(0.7)	(0.6)	(2.1)	(1.7)
Amortization of net loss	0.2	0.3	0.6	0.8
Settlements	1.6	-	1.6	-
Net periodic benefit cost	$ 1.8	$ 0.3	$ 2.1	$ 1.0

Employer Contributions

        During the fiscal nine months ended October 4, 2008, we contributed $2.3 million to our defined benefit pension plans. We anticipate making an additional $0.2 million contribution during 2008.

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COMMON STOCK

        The Board of Directors has authorized several programs to repurchase our common stock from time to time in open market transactions. We repurchased no common stock on the open market during the fiscal nine months ended October 4, 2008 and repurchased $496.9 million during the fiscal nine months ended October 6, 2007, including amounts repurchased under an accelerated stock repurchase ("ASR") program. As of October 4, 2008, $304.1 million of Board authorized repurchases was still available. We may make additional share repurchases in the future depending on, among other things, market conditions and our financial condition.

        On September 6, 2007, we entered into an ASR agreement with Goldman, Sachs & Co. ("Goldman") to repurchase $400 million of our outstanding common stock. Purchases under the ASR were subject to collar provisions that established minimum and maximum numbers of shares based generally on the volume-weighted average price of our common stock during the term of the ASR program. Final settlement of the ASR program was scheduled for no later than July 19, 2008 and could occur earlier at the option of Goldman or later under certain circumstances. Through June 5, 2008, 17.9 million shares had been delivered to us by Goldman under the terms of the ASR (an initial delivery of 15.5 million shares on September 11, 2007 and a second delivery of 2.4 million shares on October 18, 2007). On June 5, 2008, Goldman informed us that it had concluded the ASR. As a result, we received a final delivery of 3.2 million shares on June 10, 2008, bringing the aggregate number of shares received under the ASR program to 21.1 million shares. No cash was required to complete the final delivery of shares. We also received approximately $1.0 million from Goldman as the final settlement of the ASR program, which has been recorded as a reduction of the cost of the shares acquired under the ASR. The combined average price for the shares delivered under the ASR was $19.00 per share.

        Our Board of Directors has authorized our common stock repurchases as a tax-effective means to enhance shareholder value and distribute cash to shareholders and, to a lesser extent, to offset the impact of dilution resulting from the issuance of employee stock options and shares of restricted stock. In authorizing future share repurchase programs, our Board of Directors gives careful consideration to the most appropriate uses for our cash. In doing so, they also evaluate internal growth opportunities in connection with our projected cash flows and our existing capital resources.

SEGMENT INFORMATION

        We identify operating segments based on, among other things, differences in products sold and the way our management organizes the components of our business for purposes of allocating resources and assessing performance. Our operations are comprised of four reportable segments: wholesale better apparel, wholesale jeanswear, wholesale footwear and accessories, and retail. Segment revenues are generated from the sale of apparel, footwear and accessories through wholesale channels and our own retail locations. The wholesale segments include wholesale operations with third party department and other retail stores and our own retail stores, the retail segment includes operations by our own stores, and income and expenses related to trademarks, licenses and general corporate functions are reported under "licensing, other and eliminations." We define segment profit as operating income before net interest expense, goodwill impairment charges, gains or losses on sales of subsidiaries, equity in earnings of unconsolidated affiliates and income taxes. Summarized below are our revenues and income by reportable segment for the fiscal quarters and nine months ended October 4, 2008 and October 6, 2007. As a result of our exiting certain moderate product lines during 2007, we have renamed our wholesale moderate apparel segment as our wholesale jeanswear segment to better reflect the products we produce in that segment (which include jeanswear labels such as Gloria Vanderbilt, l.e.i., GLO, Bandolino Bleu, Jeanstar and Grane as well as the Energie, Erika and Pappagallo product lines).

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(In millions)	Wholesale  Better  Apparel	Wholesale  Jeanswear	Wholesale  Footwear &  Accessories	Retail	Licensing,  Other &  Eliminations	Consolidated
For the fiscal quarter ended October 4, 2008
Revenues from external customers	$ 303.8	$ 202.0	$ 269.6	$ 173.2	$ 16.1	$ 964.7
Intersegment revenues	46.8	1.1	27.6	-	(75.5)	-
Total revenues	350.6	203.1	297.2	173.2	(59.4)	964.7
Segment income (loss)	$ 36.4	$ 10.8	$ 30.4	$ (20.1)	$ (5.7)	51.8
Net interest expense						(10.5)
Equity in loss of unconsolidated affiliates						(0.4)
Income from continuing operations before provision for income taxes						$ 40.9
For the fiscal quarter ended October 6, 2007
Revenues from external customers	$ 320.5	$ 246.9	$ 267.8	$ 176.8	$ 15.6	$ 1,027.6
Intersegment revenues	46.9	2.0	24.8	-	(73.7)	-
Total revenues	367.4	248.9	292.6	176.8	(58.1)	1,027.6
Segment income (loss)	$ 44.9	$ (9.9)	$ 40.8	$ (15.3)	$ (31.7)	28.8
Net interest expense						(12.7)
Reversal of losses on assets held for sale						30.4
Equity in earnings of unconsolidated affiliates						1.0
Income from continuing operations before benefit for income taxes						$ 47.5
For the fiscal nine months ended October 4, 2008
Revenues from external customers	$ 870.2	$ 594.9	$ 737.8	$ 529.5	$ 37.1	$ 2,769.5
Intersegment revenues	117.0	3.0	63.3	-	(183.3)	-
Total revenues	987.2	597.9	801.1	529.5	(146.2)	2,769.5
Segment income (loss)	$ 116.7	$ 15.8	$ 61.4	$ (39.4)	$ (37.5)	117.0
Net interest expense						(30.0)
Gain on sale of Mexican operations and interest in Australian joint venture						1.0
Equity in loss of unconsolidated affiliates						(0.4)
Income from continuing operations before provision for income taxes						$ 87.6
For the fiscal nine months ended October 6, 2007
Revenues from external customers	$ 890.4	$ 807.4	$ 732.9	$ 541.9	$ 37.3	$ 3,009.9
Intersegment revenues	125.1	9.2	52.8	-	(187.1)	-
Total revenues	1,015.5	816.6	785.7	541.9	(149.8)	3,009.9
Segment income (loss)	$ 129.9	$ 17.6	$ 92.3	$ (38.9)	$ (130.8)	70.1
Net interest expense						(40.0)
Equity in earnings of unconsolidated affiliates						3.1
Income from continuing operations before benefit for income taxes						$ 33.2

JOINT VENTURES

        We had two joint ventures formed with HCL Technologies Limited ("HCL") to provide us with computer consulting, programming and associated support services. HCL is a global technology and software services company offering a suite of services targeted at technology vendors, software product companies and organizations. We had a 49% ownership interest in each joint venture, which operated under the names HCL Jones Technologies, LLC and HCL Jones Technologies (Bermuda), Ltd. The agreement under which the joint ventures were established terminated in January 2008, the joint ventures have ceased operations, and the parties have adopted plans of liquidation for both joint venture companies.

        We also had a 50% ownership interest in a joint venture with Sutton Development Pty. Ltd. ("Sutton") to operate retail locations in Australia, which operated under the name Nine West Australia Pty Ltd. We sold our interest in this joint venture to Sutton on December 3, 2007 for $20.7 million, which resulted in an initial pre-tax gain of $8.2 million. The sales price was subject to certain working capital adjustments, which resulted in additional sales proceeds and pre-tax gain of $0.8 million in the fiscal nine months ended October 4, 2008.

        The results of these joint ventures were reported under the equity method of accounting.

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RACHEL ROY JOINT VENTURE

        On June 10, 2008, we formed a joint venture with Royale Etenia LLC ("Royale") to develop, market and license the New York-based fashion brand Rachel Roy. Under the terms of the agreement, we own a 50% interest in the joint venture, with the remaining interest owned by Royale. The joint venture plans to develop the Rachel Roy brand through continued global expansion of the wholesale business, introduction of new product categories, and stand-alone retail stores in key U.S. and international locations. Rachel Roy will continue to lead the design of the brand. We also assumed the operations and the assets and liabilities of the existing designer collection business formerly operated by Rachel Roy Fashions, Inc. under a license with the new joint venture. These entities are consolidated by us and, accordingly, the results of operations are reflected in our financial statements. In connection with the acquisition, no material assets or liabilities were recorded in this transaction.

INVESTMENT IN GRI GROUP LIMITED

        On June 20, 2008, we acquired a 10% equity interest in GRI Group Limited, an international accessories and apparel brand management and retail-distribution network, for $20.2 million. GRI, which (including its franchisees) operates over 600 points of sale in 12 Asian countries, is the exclusive licensee of several of our brands in Asia, including Nine West, Anne Klein New York, AK Anne Klein, Easy Spirit, Enzo Angiolini and Joan & David. GRI also distributes other ladies apparel, shoes and accessory brands.

        Under the terms of our investment, GRI will be entitled to receive a future cash payment from us of up to $10.0 million if GRI's net income for its fiscal year ending January 31, 2009 exceeds a specified earnings target. Any additional payment will be recorded as an additional investment in GRI but will not increase our 10% equity interest. The results of GRI are reported under the equity method of accounting.

NEW ACCOUNTING STANDARDS

        In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities - an amendment of FASB Statement No. 133," which changes the disclosure requirements for derivative instruments and hedging activities. Entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS No. 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity's financial position, financial performance, and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008.

        In June 2008, the FASB issued FASB Staff Position No. EITF 03-6-1, "Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities," which classifies unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) as participating securities and requires them to be included in the computation of earnings per share pursuant to the two-class method described in SFAS No. 128, "Earnings per Share." This Staff Position is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those years. All prior-period earnings per share data presented are to be adjusted retrospectively (including interim financial statements, summaries of earnings, and selected financial data) to conform with the provisions of this Staff Position, with early application not permitted. The adoption of this Staff Position, which will require us to allocate a portion of net income to these participating securities, will not have a material effect on our historical or future reported earnings per share.

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SUPPLEMENTAL SUMMARIZED FINANCIAL INFORMATION

        Certain of our subsidiaries function as co-issuers (fully and unconditionally guaranteed on a joint and several basis) of the outstanding debt of Jones Apparel Group, Inc. ("Jones"), including Jones Apparel Group USA, Inc. ("Jones USA"), Jones Apparel Group Holdings, Inc. ("Jones Holdings"), Nine West Footwear Corporation ("Nine West") and Jones Retail Corporation ("Jones Retail").

        The following condensed consolidating balance sheets, statements of operations and statements of cash flows for the "Issuers" (consisting of Jones and Jones USA, Jones Holdings, Nine West and Jones Retail, which are all our subsidiaries that act as co-issuers and co-obligors) and the "Others" (consisting of all of our other subsidiaries, excluding all obligor subsidiaries) have been prepared using the equity method of accounting in accordance with the requirements for presentation of such information. Separate financial statements and other disclosures concerning Jones are not presented as Jones has no independent operations or assets. There are no contractual restrictions on distributions from Jones USA, Jones Holdings, Nine West or Jones Retail to Jones.

Condensed Consolidating Balance Sheets
(In millions)

		October 4, 2008				December 31, 2007
		Issuers	Others	Elim-  inations	Cons-  olidated	Issuers	Others	Elim-  inations	Cons-  olidated
ASSETS
CURRENT ASSETS:
	Cash and cash equivalents	$ 183.9	$ 16.4	$ -	$ 200.3	$ 264.0	$ 38.8	$ -	$ 302.8
	Accounts receivable	335.9	138.7	-	474.6	205.3	131.7	-	337.0
	Inventories	369.2	178.9	(0.2)	547.9	358.5	165.7	(0.3)	523.9
	Prepaid income taxes	0.7	0.2	6.9	7.8	1.4	5.2	24.0	30.6
	Deferred taxes	9.3	16.1	-	25.4	13.6	19.4	0.9	33.9
	Prepaid expenses and other current assets	43.4	14.4	-	57.8	39.7	26.2	-	65.9
	TOTAL CURRENT ASSETS	942.4	364.7	6.7	1,313.8	882.5	387.0	24.6	1,294.1
Property, plant and equipment - net		138.4	168.3	-	306.7	161.2	150.9	-	312.1
Due from affiliates		-	1,111.2	(1,111.2)	-	-	971.7	(971.7)	-
Goodwill		972.8	67.6	(66.5)	973.9	972.8	67.6	(66.5)	973.9
Other intangibles - net		0.7	616.0	-	616.7	0.3	617.7	-	618.0
Deferred taxes		20.3	-	(20.3)	-	20.4	-	(19.1)	1.3
Investments in subsidiaries		1,834.0	-	(1,834.0)	-	1,746.8	-	(1,746.8)	-
Other assets		26.4	30.3	(0.1)	56.6	26.2	11.0	-	37.2
		$ 3,935.0	$ 2,358.1	$ (3,025.4)	$ 3,267.7	$ 3,810.2	$ 2,205.9	$ (2,779.5)	$ 3,236.6
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
	Current portion of capital lease obligations	$ -	$ 3.5	$ -	$ 3.5	$ 0.6	$ 4.2	$  -	$ 4.8
	Accounts payable	150.1	72.8	-	222.9	175.0	48.6	-	223.6
	Income taxes payable	21.4	12.4	(18.6)	15.2	19.7	1.0	(0.3)	20.4
	Accrued expenses and other current liabilities	85.6	46.8	-	132.4	96.6	50.2	-	146.8
	TOTAL CURRENT LIABILITIES	257.1	135.5	(18.6)	374.0	291.9	104.0	(0.3)	395.6
NONCURRENT LIABILITIES:
	Long-term debt	749.4	-	-	749.4	749.4	-	-	749.4
	Obligations under capital leases	-	30.0	-	30.0	4.3	24.0	-	28.3
	Deferred taxes	-	27.7	(7.9)	19.8	-	5.8	(5.8)	-
	Due to affiliates	1,111.2	-	(1,111.2)	-	971.7	-	(971.7)	-
	Other	53.6	15.1	-	68.7	50.8	15.7	-	66.5
	TOTAL NONCURRENT LIABILITIES	1,914.2	72.8	(1,119.1)	867.9	1,776.2	45.5	(977.5)	844.2
	TOTAL LIABILITIES	2,171.3	208.3	(1,137.7)	1,241.9	2,068.1	149.5	(977.8)	1,239.8
STOCKHOLDERS' EQUITY:
	Common stock and additional paid-in capital	1,350.9	1,709.0	(1,709.0)	1,350.9	1,341.2	1,707.8	(1,707.8)	1,341.2
	Retained earnings	2,240.4	436.3	(174.2)	2,502.5	2,226.1	339.7	(85.0)	2,480.8
	Accumulated other comprehensive (loss) income	(1.3)	4.5	(4.5)	(1.3)	2.1	8.9	(8.9)	2.1
	Treasury stock	(1,826.3)	-	-	(1,826.3)	(1,827.3)	-	-	(1,827.3)
	TOTAL STOCKHOLDERS' EQUITY	1,763.7	2,149.8	(1,887.7)	2,025.8	1,742.1	2,056.4	(1,801.7)	1,996.8
		$ 3,935.0	$ 2,358.1	$ (3,025.4)	$ 3,267.7	$ 3,810.2	$ 2,205.9	$ (2,779.5)	$ 3,236.6

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Condensed Consolidating Statements of Operations
(In millions)

		Fiscal Quarter Ended October 4, 2008				Fiscal Quarter Ended October 6, 2007
		Issuers	Others	Elim-  inations	Cons-  olidated	Issuers	Others	Elim-  inations	Cons-  olidated
Net sales		$ 710.6	$ 242.9	$ (4.9)	$ 948.6	$ 716.9	$ 299.7	$ (4.8)	$ 1,011.8
Licensing income		-	16.0	-	16.0	-	15.4	-	15.4
Service and other revenue		-	0.1	-	0.1	0.2	0.2	-	0.4
	Total revenues	710.6	259.0	(4.9)	964.7	717.1	315.3	(4.8)	1,027.6
Cost of goods sold		471.3	171.4	(1.3)	641.4	467.4	235.2	(1.5)	701.1
	Gross profit	239.3	87.6	(3.6)	323.3	249.7	80.1	(3.3)	326.5
Selling, general and administrative expenses		249.3	25.8	(3.6)	271.5	251.8	37.8	(3.4)	286.2
Trademark impairments		-	-	-	-	-	11.5	-	11.5
Reversal of losses on assets held for sale		-	-	-	-	-	30.4	-	30.4
	Operating (loss) income	(10.0)	61.8	-	51.8	(2.1)	61.2	0.1	59.2
Net interest (expense) income and financing costs		(12.8)	2.3	-	(10.5)	(17.5)	4.8	-	(12.7)
Equity in (loss) earnings of unconsolidated affiliates		-	(0.3)	(0.1)	(0.4)	-	1.0	-	1.0
	(Loss) income from continuing operations before provision for income taxes and equity in earnings of subsidiaries	(22.8)	63.8	(0.1)	40.9	(19.6)	67.0	0.1	47.5
(Benefit) provision for income taxes		(7.0)	21.9	(0.3)	14.6	(114.6)	23.7	-	(90.9)
Equity in earnings of subsidiaries		41.6	-	(41.6)	-	2.4	-	(2.4)	-
	Income from continuing operations	25.8	41.9	(41.4)	26.3	97.4	43.3	(2.3)	138.4
Income (loss) from discontinued operations, net of tax		1.0	-	-	1.0	296.2	(34.5)	-	261.7
	Net income	$ 26.8	$ 41.9	$ (41.4)	$ 27.3	$ 393.6	$ 8.8	$ (2.3)	$ 400.1

		Fiscal Nine Months Ended October 4, 2008				Fiscal Nine Months Ended October 6, 2007
		Issuers	Others	Elim-  inations	Cons-  olidated	Issuers	Others	Elim-  inations	Cons-  olidated
Net sales		$ 2,036.3	$ 708.8	$ (12.9)	$ 2,732.2	$ 2,042.1	$ 941.8	$ (13.1)	$ 2,970.8
Licensing income		-	36.5	-	36.5	-	36.8	-	36.8
Service and other revenue		0.2	0.6	-	0.8	0.6	1.7	-	2.3
	Total revenues	2,036.5	745.9	(12.9)	2,769.5	2,042.7	980.3	(13.1)	3,009.9
Cost of goods sold		1,342.2	508.7	(7.7)	1,843.2	1,321.4	714.1	(7.4)	2,028.1
	Gross profit	694.3	237.2	(5.2)	926.3	721.3	266.2	(5.7)	981.8
Selling, general and administrative expenses		716.9	101.5	(9.3)	809.1	726.7	114.0	(9.5)	831.2
Trademark impairments		-	-	-	-	-	80.5	-	80.5
	Operating (loss) income	(22.6)	135.7	4.1	117.2	(5.4)	71.7	3.8	70.1
Net interest (expense) income and financing costs		(38.2)	8.2	-	(30.0)	(55.2)	15.2	-	(40.0)
Gain on sale of interest in Australian joint venture		-	0.8	-	0.8	-	-	-	-
Equity in (loss) earnings of unconsolidated affiliates		-	(0.3)	(0.1)	(0.4)	(0.9)	2.0	2.0	3.1
	(Loss) income from continuing operations before provision for income taxes and equity in earnings of subsidiaries	(60.8)	144.4	4.0	87.6	(61.5)	88.9	5.8	33.2
(Benefit) provision for income taxes		(15.1)	47.9	(1.7)	31.1	(124.6)	26.2	(0.1)	(98.5)
Equity in earnings of subsidiaries		94.7	-	(94.7)	-	25.0	-	(25.0)	-
	Income from continuing operations	49.0	96.5	(89.0)	56.5	88.1	62.7	(19.1)	131.7
Income (loss) from discontinued operations, net of tax		1.0	-	-	1.0	295.8	(26.6)	-	269.2
	Net income	$ 50.0	$ 96.5	$ (89.0)	$ 57.5	$ 383.9	$ 36.1	$ (19.1)	$ 400.9

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Condensed Consolidating Statements of Cash Flows
(In millions)

		Fiscal Nine Months Ended October 4, 2008				Fiscal Nine Months Ended October 6, 2007
		Issuers	Others	Elim-  inations	Cons-  olidated	Issuers	Others	Elim-  inations	Cons-  olidated
Cash flows from operating activities:
	Net cash (used in) provided by operating activities of continuing operations	$ (13.1)	$ 21.0	$ -	$ 7.9	$ (122.6)	$ 11.1	$ -	$ (111.5)
	Net cash provided by operating activities of discontinued operations	-	-	-	-	-	38.9	-	38.9
	Net cash (used in) provided by operating activities	(13.1)	21.0	-	7.9	(122.6)	50.0	-	(72.6)
Cash flows from investing activities:
	Net proceeds from sale of Barneys	-	-	-	-	858.7	-	-	858.7
	Capital expenditures	(32.0)	(24.8)	-	(56.8)	(43.6)	(35.4)	-	(79.0)
	Investment in GRI	-	(20.2)	-	(20.2)	-	-	-	-
	Acquisition-related costs	(0.2)	-	-	(0.2)	-	-	-	-
	Proceeds from sales of assets	0.5	6.8	-	7.3	0.1	2.7	-	2.8
	Net cash (used in) provided by investing activities of continuing operations	(31.7)	(38.2)	-	(69.9)	815.2	(32.7)	-	782.5
	Net cash used in investing activities of discontinued operations					-	(40.5)	-	(40.5)
	Net cash (used in) provided by investing activities	(31.7)	(38.2)	-	(69.9)	815.2	(73.2)	-	742.0
Cash flows from financing activities:
	Net repayments under credit facilities	-	-	-	-	(100.0)	-	-	(100.0)
	Principal payments on capital leases	(0.4)	(3.2)	-	(3.6)	(0.6)	(2.3)	-	(2.9)
	Purchases of treasury stock	1.0	-	-	1.0	(496.9)	-	-	(496.9)
	Dividends paid	(35.8)	-	-	(35.8)	(45.3)	-	-	(45.3)
	Proceeds from exercise of employee stock options	0.1	-	-	0.1	11.1	-	-	11.1
	Net cash advances to discontinued operations	-	-	-	-	(21.8)	-	-	(21.8)
	Repayment of acquired debt	(0.2)	-	-	(0.2)	-	-	-	-
	Excess tax benefits from share-based payment arrangements	-	-	-	-	2.4	-	-	2.4
	Net cash used in financing activities of continuing operations	(35.3)	(3.2)	-	(38.5)	(651.1)	(2.3)	-	(653.4)
	Net cash provided by financing activities of discontinued operations	-	-	-	-	-	18.0	-	18.0
	Net cash (used in) provided by financing activities	(35.3)	(3.2)	-	(38.5)	(651.1)	15.7	-	(635.4)
Effect of exchange rates on cash		-	(2.0)	-	(2.0)	-	3.5	-	3.5
Net (decrease) increase in cash and cash equivalents		(80.1)	(22.4)	-	(102.5)	41.5	(4.0)	-	37.5
Cash and cash equivalents, beginning, including cash reported under assets held for sale		264.0	38.8	-	302.8	35.1	36.4	-	71.5
Cash and cash equivalents, ending		$ 183.9	$ 16.4	$ -	$ 200.3	$ 76.6	$ 32.4	$ -	$ 109.0

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

        The following discussion provides information and analysis of our results of operations for the 13 and 40 week periods ended October 4, 2008 (hereinafter referred to as the "third fiscal quarter of 2008" and the "first fiscal nine months of 2008," respectively) and the 13 and 40 week periods ended October 6, 2007 (hereinafter referred to as the "third fiscal quarter of 2007" and the "first fiscal nine months of 2007," respectively), and our liquidity and capital resources. The following discussion and analysis should be read in conjunction with our Consolidated Financial Statements included elsewhere herein.

Business Overview

        We design, contract for the manufacture of and market a broad range of women's collection sportswear, suits and dresses, casual sportswear and jeanswear for women and children, and women's footwear and accessories. We sell our products through a broad array of distribution channels, including better specialty and department stores and mass merchandisers, primarily in the United States and Canada. We also operate our own network of retail and factory outlet stores. In addition, we license the use of several of our brand names to select manufacturers and distributors of women's and men's apparel and accessories worldwide.

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        During the first fiscal nine months of 2008, the following significant events took place:

• in February 2008, we announced that Wal-Mart Stores Inc. ("Wal-Mart") would be the exclusive retailer of our l.e.i. brand for juniors, junior plus and girls beginning with the 2008 back-to-school shopping season at Wal-Mart stores nationwide;
• in May 2008, we announced the sale of our remaining Mexican operations;
• in June 2008, we announced that we successfully completed amendments to our $1 billion and $750 million five-year revolving credit facilities which expire on June 15, 2009 and May 16, 2010, respectively, with the terms and conditions of the credit facilities remaining substantially unchanged, except for modification of the pricing provisions and certain covenants and reduction of the aggregate commitment under the $1 billion facility to $500 million;
• in June 2008, we announced that we formed a joint venture with Royale Etenia LLC ("Royale") to develop, market and license the New York-based fashion brand Rachel Roy and that we also assumed the operating assets and liabilities of Rachel Roy Fashions, Inc.;
• in June 2008, we announced that we acquired a minority interest in GRI Group Limited, an international accessories and apparel brand management and retail-distribution network;
• in June 2008, we announced the completion of our accelerated stock repurchase ("ASR") program;
• in July 2008, we announced we had entered into an agreement with New Balance Athletic Shoe, Inc. ("New Balance") to license, create and distribute a fashion-lifestyle footwear collection that brings together New Balance's innovative performance and materials technology with Nine West's renowned fashion styling; and
• on August 5, 2008, Standard & Poor's removed our corporate credit and senior unsecured debt ratings from credit watch and lowered the ratings to BB from BB+. It further lowered the ratings to BB- on October 29, 2008 while maintaining its previously-assigned negative outlook. On October 20, 2008, Moody's lowered our corporate family and probability of default ratings to Ba2 from Ba1 and assigned a ratings outlook of stable..

Rachel Roy Joint Venture

        On June 10, 2008, we formed a joint venture with Royale to develop, market and license the New York-based fashion brand Rachel Roy. Under the terms of the agreement, we own a 50% interest in the joint venture, with the remaining interest owned by Royale. The joint venture plans to develop the Rachel Roy brand through continued global expansion of the wholesale business, introduction of new product categories, and stand-alone retail stores in key U.S. and international locations. Rachel Roy will continue to lead the design of the brand. We also assumed the operations and the assets and liabilities of the existing designer collection business formerly operated by Rachel Roy Fashions, Inc. under a license with the new joint venture. These entities are consolidated by us and, accordingly, the results of operations are reflected in our financial statements. In connection with the acquisition, no material assets or liabilities were recorded in this transaction.

Investment in GRI

        On June 20, 2008, we acquired a 10% equity interest in GRI, an international accessories and apparel brand management and retail-distribution network, for $20.2 million. GRI, which (including its franchisees) operates over 600 points of sale in 12 Asian countries, is the exclusive licensee of several of our brands in Asia, including Nine West, Anne Klein New York, AK Anne Klein, Easy Spirit, Enzo Angiolini and Joan & David. GRI also distributes other ladies apparel, shoes and accessory brands.

        Under the terms of our investment, GRI will be entitled to receive a future cash payment from us of up to $10.0 million if GRI's net income for its fiscal year ending January 31, 2009 exceeds a specified earnings target. Any additional payment will be recorded as an additional investment in GRI but will not increase our 10% equity interest. Based on projected results of GRI for the remainder of 2008, we currently do not anticipate making any additional payments. The results of GRI are reported under the equity method of accounting.

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Completion of ASR Program

        On September 6, 2007, we entered into an ASR agreement with Goldman, Sachs & Co. ("Goldman") to repurchase $400 million of our outstanding common stock. Purchases under the ASR were subject to collar provisions that established minimum and maximum numbers of shares based generally on the volume-weighted average price of our common stock during the term of the ASR program. Final settlement of the ASR program was scheduled for no later than July 19, 2008 and could occur earlier at the option of Goldman or later under certain circumstances. Through June 5, 2008, 17.9 million shares had been delivered to us by Goldman under the terms of the ASR. On June 5, 2008, Goldman informed us that it had concluded the ASR. As a result, we received a final delivery of 3.2 million shares on June 10, 2008, bringing the aggregate number of shares received under the ASR program to 21.1 million shares. No cash was required to complete the final delivery of shares. The combined average price for the shares delivered under the ASR was $19.00 per share.

Strategic Decisions Regarding Certain Moderate Apparel Brands

        Our continued strategic operational reviews and efforts to improve profitability and the continued trend of our moderate and jeanswear customers towards differentiated product offerings led us to make the strategic decision to exit some of our moderate apparel product lines during 2007. As a result of this exit, we have renamed our wholesale moderate apparel segment as our wholesale jeanswear segment to better reflect the products we produce in that segment. We believe that exiting these product lines will strengthen our future operating results and allow us to focus primarily on growth opportunities in our remaining wholesale product lines, which have strong fundamentals and operate at substantially higher margins. This decision did not impact in any way our denim and junior division labels such as Gloria Vanderbilt, l.e.i., Energie, GLO, Jeanstar, Grane and others, which are also reported in the wholesale jeanswear segment. The moderate product lines we exited have not been classified as discontinued operations as they do not meet the criteria for discontinued operations as set forth in SFAS No. 144. As a result of the loss of these projected revenues, we recorded impairments for our Norton McNaughton and Erika trademarks of $69.0 million in our licensing, other and eliminations segment during the fiscal quarter ended July 7, 2007. In connection with this decision, we also announced the closing of our Goose Creek, South Carolina and Edison, New Jersey distribution centers. See "Accrued Restructuring Costs" in Notes to Consolidated Financial Statements.

        The assets and liabilities relating to the moderate product lines originally planned to be sold were classified as held for sale in the Consolidated Balance Sheet at July 7, 2007. We had estimated the fair value of the moderate net assets to be sold to be $22.5 million based upon preliminary sales negotiations. The carrying value of these net assets was $52.9 million as of July 7, 2007; therefore, we recorded a loss of $30.4 million to write these assets down to realizable value. We subsequently decided to shut down and liquidate these brands rather than sell them and, as a result, we reclassified the assets previously reported as assets held for sale as assets held and used during the fiscal quarter ended October 6, 2007. During the fiscal quarter ended October 6, 2007, we reversed $16.8 million of previously reported losses on assets held for sale since the carrying value of these current assets would be recovered during the process of shutting down and liquidating the related brands. We also reclassified the remaining $13.6 million of previously reported losses on assets held for sale as additional impairments of trademarks and property, plant and equipment of $11.5 million and $2.1 million, respectively, during the fiscal quarter ended October 6, 2007.

        We also announced in February 2008 that Wal-Mart would be the exclusive retailer of our l.e.i. brand for juniors, junior plus and girls beginning with the 2008 back-to-school shopping season at Wal-Mart stores nationwide.

Sale of Mexican Operations

        On September 12, 2006, we announced the closing of our Mexican operations related to the decision by Polo to discontinue the Polo Jeans Company product line, which we produced for Polo subsequent to the sale of the Polo Jeans Company business to Polo in February 2006. At that time, we determined the estimated fair value of the property, plant and equipment employed in Mexico was less than its carrying value. As a result, we recorded an impairment loss of $8.6 million, which was reported as cost of sales in the wholesale jeanswear segment in

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2006. The closing was substantially completed by the end of March 2007. On May 8, 2008, we sold the Mexican operations for $5.9 million, resulting in a gain of $0.2 million.

Sale of Barneys

        On September 6, 2007, we completed the sale of Barneys to an affiliate of Istithmar PJSC. In accordance with the provisions of SFAS No. 144, the results of operations of Barneys for the fiscal quarter and nine months ended October 6, 2007 have been reported as discontinued operations and the assets and liabilities relating to Barneys have been reclassified as held for sale in the Consolidated Balance Sheet for October 6, 2007.

Critical Accounting Policies

        Several of our accounting policies involve significant or complex judgements and uncertainties and require us to make certain critical accounting estimates. We consider an accounting estimate to be critical if it requires us to make assumptions about matters that were highly uncertain at the time the estimate was made. The estimates with the greatest potential effect on our results of operations and financial position include the collectibility of accounts receivable, the recovery value of obsolete or overstocked inventory and the fair values of both our goodwill and intangible assets with indefinite lives. Estimates related to accounts receivable affect our wholesale better apparel, wholesale jeanswear, wholesale footwear and accessories and retail segments. Estimates related to inventory and goodwill affect our wholesale better apparel, wholesale jeanswear, wholesale footwear and accessories and retail segments. Estimates related to intangible assets with indefinite lives affect our licensing, other and eliminations segment.

        For accounts receivable, we estimate the net collectibility, considering both historical and anticipated trends of trade discounts and co-op advertising deductions given to our customers, allowances we provide to our retail customers to flow goods through the retail channels, and the possibility of non-collection due to the financial position of our customers. For inventory, we estimate the amount of goods that we will not be able to sell in the normal course of business and write down the value of these goods to the recovery value expected to be realized through off-price channels. Historically, actual results in these areas have not been materially different than our estimates, and we do not anticipate that our estimates and assumptions are likely to materially change in the future. However, if we incorrectly anticipate trends or unexpected events occur, our results of operations could be materially affected.

        We test our goodwill and our trademarks for impairment on an annual basis (during our fourth fiscal quarter) and between annual tests if an event occurs or circumstances change that would reduce the fair value of an asset below its carrying value. These tests utilize discounted cash flow models to estimate fair values. These cash flow models involve several assumptions. Changes in our assumptions could materially impact our fair value estimates and material impairment losses could result where the estimated fair values of these assets become less than their carrying amounts. Assumptions critical to our fair value estimates are: (i) discount rates used to derive the present value factors used in determining the fair value of the reporting units and trademarks; (ii) royalty rates used in our trade mark valuations; (iii) projected average revenue growth rates used in the reporting unit and trademark models; and (iv) projected long-term growth rates used in the derivation of terminal values. These and other assumptions are impacted by economic conditions and expectations of management and will change in the future based on period-specific facts and circumstances.

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RESULTS OF OPERATIONS

Statements of Operations Stated in Dollars and as a Percentage of Total Revenues

(In millions)	Fiscal Quarter Ended				Fiscal Nine Months Ended
	October 4, 2008		October 6, 2007		October 4, 2008		October 6, 2007
Net sales	$ 948.6	98.3%	$ 1,011.8	98.5%	$ 2,732.2	98.7%	$ 2,970.8	98.7%
Licensing income	16.0	1.7%	15.4	1.5%	36.5	1.3%	36.8	1.2%
Service and other revenue	0.1	0.0%	0.4	0.0%	0.8	0.0%	2.3	0.1%
Total revenues	964.7	100.0%	1,027.6	100.0%	2,769.5	100.0%	3,009.9	100.0%
Cost of goods sold	641.4	66.5%	701.1	68.2%	1,843.2	66.6%	2,028.1	67.4%
Gross profit	323.3	33.5%	326.5	31.8%	926.3	33.4%	981.8	32.6%
Selling, general and administrative expenses	271.5	28.1%	286.2	27.9%	809.1	29.2%	831.2	27.6%
Trademark impairments	-	-	11.5	1.1%	-	-	80.5	2.7%
Reversal of losses on assets held for sale	-	-	30.4	3.0%	-	-	-	-
Operating income	51.8	5.4%	59.2	5.8%	117.2	4.2%	70.1	2.3%
Net interest expense and financing costs	10.5	1.1%	12.7	1.2%	30.0	1.1%	40.0	1.3%
Gain on sale of interest in Australian joint venture	-	-	-	-	0.8	0.0%	-	-
Equity in (loss) earnings of unconsolidated affiliates	(0.4)	(0.0%)	1.0	0.1%	(0.4)	(0.0%)	3.1	0.1%
Income from continuing operations before provision for income taxes	40.9	4.2%	47.5	4.6%	87.6	3.2%	33.2	1.1%
Provision (benefit) for income taxes	14.6	1.5%	(90.9)	(8.8%)	31.1	1.1%	(98.5)	(3.3%)
Income from continuing operations	26.3	2.7%	138.4	13.5%	56.5	2.0%	131.7	4.4%
Income from discontinued operations, net of tax	1.0	0.1%	261.7	25.5%	1.0	0.0%	269.2	8.9%
Net income	$ 27.3	2.8%	$ 400.1	38.9%	$ 57.5	2.1%	$ 400.9	13.3%

Percentage totals may not add due to rounding.

Fiscal Quarter Ended October 4, 2008 Compared to Fiscal Quarter Ended October 6, 2007

        Revenues.  Total revenues for the third fiscal quarter of 2008 were $0.96 billion, compared with $1.03 billion for the third fiscal quarter of 2007, a decrease of 6.1%.

        Revenues by segment were as follows:

(In millions)	Third Fiscal Quarter of 2008	Third Fiscal Quarter of 2007	Increase/ (Decrease)	Percent  Change
Wholesale better apparel	$ 303.8	$ 320.5	$ (16.7)	(5.2%)
Wholesale jeanswear	202.0	246.9	(44.9)	(18.2%)
Wholesale footwear and accessories	269.6	267.8	1.8	0.7%
Retail	173.2	176.8	(3.6)	(2.0%)
Other	16.1	15.6	0.5	3.2%
Total revenues	$ 964.7	$ 1,027.6	$ (62.9)	(6.1%)

        Wholesale better apparel revenues decreased $16.7 million, primarily due to lower shipments of our Jones New York, Jones New York Sport, Nine West and specialty market product lines, due to decreased orders from our customers based on the performance of these brands at retail. This decrease was partially offset by increased shipments of our Jones New York Signature product line, due to increased customer orders based on the performance of the brand at retail and initial shipments of our new casual line of products, and of our Joneswear product line, due to increased customer orders based on the performance of the brand at retail.

        Wholesale jeanswear revenues decreased $44.9 million. Lower shipments of our Rena Rowan, Nine & Co., Evan-Picone, Bandolino, Pappagallo and Erika moderate product lines which were discontinued or repositioned in

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the market in 2007, and lower shipments of our Energie product line, due to decreased orders from our customers based on the performance of the brand at retail, reduced sales by approximately $53 million. These decreases were partially offset by initial shipments of our l.e.i. brand to Wal-Mart and initial sales of the relaunched Erika, Pappagallo and Evan-Picone product lines during the current period.

        Wholesale footwear and accessories revenues increased $1.8 million, primarily as a result of: increased shipments in our international businesses due to continued expansion by our licensed partners; increased shipments of our Nine West and Nine & Co. handbag product lines due to increased orders from our customers based on the performance of these brands at retail; and initial shipments of our AK Anne Klein handbag line.  These increases were offset by decreased shipping of our Nine West footwear products, primarily related to planned lower sales to value chain retailers and a shift in the market away from dress shoes towards casual shoes.

        Retail revenues decreased $3.6 million, primarily due to a 2.5% decline in comparable store sales ($4.0 million).  Comparable stores are those that have been open for a full year, are not scheduled to close in the current period and are not scheduled for an expansion or downsize by more than 25% or relocation to a different street or mall. A 0.6% decrease in comparable store sales for our footwear stores ($0.6 million) and a 10.9% decrease in comparable store sales for our apparel store sales ($6.5 million) were offset by an 85.3% increase in our e-commerce business ($3.1 million). We began the third fiscal quarter of 2008 with 1,018 retail locations and had a net decrease of five locations during the quarter to end the quarter with 1,013 locations. This compares with 1,018 locations at the end of the third fiscal quarter of 2007.

        Gross Profit. The gross profit margin increased to 33.5% in the third fiscal quarter of 2008 compared with 31.8% in the third fiscal quarter of 2007.

        Wholesale better apparel gross profit margins were 30.5% and 31.1% for the third fiscal quarters of 2008 and 2007, respectively. The decrease was due to higher levels of sales to off-price retailers in our suit and dress product lines.

        Wholesale jeanswear gross profit margins were 23.7% and 16.1% for the third fiscal quarters of 2008 and 2007, respectively. The increase is primarily due to the negative impact in the prior period of high levels of vendor allowances to clear inventory for the lower-margin moderate brands we had planned to exit or sell.

        Wholesale footwear and accessories gross profit margins were 27.4% and 29.7% for the third fiscal quarters of 2008 and 2007, respectively. The decrease was due to higher levels of sales to off-price retailers to liquidate excess inventory, growth in our lower-margin international business and increased production costs in China and other Pacific Rim countries in the current period.

        Retail gross profit margins were 49.7% and 48.4% for the third fiscal quarters of 2008 and 2007, respectively. The increase was primarily the result of lower levels of excess footwear inventory liquidation in the current period.

        Selling, General and Administrative Expenses. Selling, general and administrative ("SG&A") expenses were $271.5 million in the third fiscal quarter of 2008 and $286.2 million in the third fiscal quarter of 2007.

        Wholesale better apparel SG&A expenses increased $1.2 million, primarily from $1.5 million of additional bad debt expense related to the Boscov's, Inc. ("Boscov's") bankruptcy filing. Higher levels of distribution expenses were offset by lower levels of advertising costs.

        Wholesale jeanswear SG&A expenses decreased $12.5 million, primarily from cost savings resulting from exiting of some of our moderate apparel product lines during 2007, which were partially offset by $1.5 million of advertising costs related to the launch of l.e.i. at Wal-Mart and $1.8 million of additional bad debt expense related to the bankruptcy filings of Mervyn's LLC ("Mervyn's") and Boscov's.

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        Wholesale footwear and accessories SG&A expenses increased $4.8 million, primarily due to a $1.9 million increase in salary and employee benefit costs (including the settlement of pension liabilities), a $1.7 million increase in overhead costs, $0.9 million of additional bad debt expense related to the Boscov's bankruptcy filing and $0.7 million of increased advertising costs in the current period, offset by $0.9 million lower professional fees compared with the prior period.

        Retail SG&A expenses increased $5.4 million, primarily due to a $1.5 million write-off of computer software, $1.7 million of higher overhead expenses and $1.0 million higher depreciation expenses in the current period.

        SG&A expenses for the licensing, eliminations and other segment decreased $13.6 million, primarily due to $16.5 million recorded in the prior period relating to the termination of two former executive officers, partially offset by $1.5 million of additional amortization of employee stock options and restricted stock in the current period and $1.4 million of other cost increases, including the effects of foreign currency exchange rates.

        Operating Income. The resulting operating income from continuing operations for the third fiscal quarter of 2008 was $51.8 million, compared with $59.2 million for the third fiscal quarter of 2007, due to the factors described above, the $11.5 million of trademark impairments and the reversal of $30.4 million of losses on assets held for sale recorded in the previous period.

        Net Interest Expense. Net interest expense from continuing operations was $10.5 million in the third fiscal quarter of 2008, compared with $12.7 million in the third fiscal quarter of 2007. The decrease was primarily the result of no outstanding borrowings under our credit facilities and higher interest income from higher cash balances during the third fiscal quarter of 2008.

        Provision for Income Taxes. The effective income tax rate on continuing operations was 35.6% for the third fiscal quarter of 2008. Excluding the effects of the reversal of deferred tax valuation allowances related to the sale of Barneys ($107.7 million), the effective tax rate on continuing operations was 35.3% for the third fiscal quarter of 2007. The increase is due primarily to a lesser impact of the foreign income tax differential relative to pre-tax income in the current period than in the prior period.

        Net Income and Earnings Per Share. Net income was $27.3 million in the third fiscal quarter of 2008, compared with $400.1 million in the third fiscal quarter of 2007, which included the $258.2 million gain on the sale of Barneys. Diluted earnings per share for the third fiscal quarter of 2008 was $0.33, compared with $3.97 for the third fiscal quarter of 2007, on 17.6% fewer shares outstanding.

Fiscal Nine Months Ended October 4, 2008 Compared with Fiscal Nine Months Ended October 6, 2007

        Revenues.  Total revenues for the first fiscal nine months of 2008 were $2.8 billion, compared with $3.0 billion for the first fiscal nine months of 2007, a decrease of 8.0%.

        Revenues by segment were as follows:

(In millions)	First Fiscal Nine Months of 2008	First Fiscal Nine Months of 2007	Increase/ (Decrease)	Percent  Change
Wholesale better apparel	$ 870.2	$ 890.4	$ (20.2)	(2.3%)
Wholesale jeanswear	594.9	807.4	(212.5)	(26.3%)
Wholesale footwear and accessories	737.8	732.9	4.9	0.7%
Retail	529.5	541.9	(12.4)	(2.3%)
Other	37.1	37.3	(0.2)	(0.1%)
Total revenues	$ 2,769.5	$ 3,009.9	$ (240.4)	(8.0%)

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        Wholesale better apparel revenues decreased $20.2 million, primarily due to lower shipments of our Jones New York, Nine West, Jones New York Sport and specialty market product lines, due to decreased orders from our customers based on the performance of these brands at retail. This decrease was partially offset by increased shipments of our Jones New York Signature product line, due to both increased customer orders based on the performance of this brand at retail and initial shipments of our new casual line of products, and by increased shipments of our Joneswear and Anne Klein product lines, due to increased customer orders based on the performance of these brands at retail.

        Wholesale jeanswear revenues decreased $212.5 million. Lower shipments of our Rena Rowan, Nine & Co., Evan-Picone, Bandolino, Pappagallo and Erika moderate product lines, which were discontinued or repositioned in the market in 2007, reduced sales by approximately $215 million. Planned reductions of our GLO product line to focus on the l.e.i. brand and lower shipments of our Energie product line, due to decreased orders from our customers based on the performance of the brand at retail, were offset by initial sales of the relaunched Erika, Pappagallo and Evan-Picone product lines during the current period.

        Wholesale footwear and accessories revenues increased $4.9 million, primarily as a result of: increased shipments in our international businesses due to continued expansion by our licensed partners; increased shipments of our Nine West and Nine & Co. handbag product lines, due to increased orders from our customers based on the performance of these brands at retail; and initial shipments of our AK Anne Klein handbag line.  These increases were partially offset by lower sales of our Nine West footwear products, primarily related to planned lower sales to value chain retailers and a shift in the market away from dress shoes towards casual shoes.

        Retail revenues decreased $12.4 million, primarily due to a 3.6% decline in comparable store sales ($17.5 million). A 0.5% decrease in comparable store sales for our footwear stores ($1.5 million) and a 12.8% decrease in comparable store sales for our apparel stores ($21.8 million) were offset by a 42.9% increase in our e-commerce business ($5.8 million) and $9.3 million in sales from new store openings. We began the first fiscal nine months of 2008 with 1,034 retail locations and had a net decrease of 21 locations during the period to end the period with 1,013 locations. This compares with 1,018 locations at the end of the first fiscal nine months of 2007.

        Revenues for the first fiscal nine months of 2008 include $0.6 million in the licensing and other segment of service fees charged to Barneys under a short-term transition services agreement entered into with Barneys at the time of the sale of Barneys. These revenues were based on contractual monthly fees as set forth in the agreement. The agreement ended in May 2008.

        Revenues for the first fiscal nine months of 2007 include $1.6 million of service fees charged to Polo under a short-term transition service agreement entered into with Polo at the time of the sale of the Polo Jeans Company business. These revenues were based on contractual monthly and per-unit fees as set forth in the agreement. Of this amount, $1.1 million was recorded in the wholesale better apparel segment, $0.2 million was recorded in the wholesale jeanswear segment and $0.3 million was recorded in the licensing and other segment.

        Gross Profit. The gross profit margin increased to 33.4% in the first fiscal nine months of 2008, compared with 32.6% in the first fiscal nine months of 2007.

        Wholesale better apparel gross profit margins were 32.2% and 33.8% for the first fiscal nine months of 2008 and 2007, respectively. The decrease was due to higher levels of sales to off-price retailers in our suit and dress product lines.

        Wholesale jeanswear gross profit margins were 23.0% and 19.8% for the first fiscal nine months of 2008 and 2007, respectively. The increase is primarily due to the negative impact in the prior period of high levels of vendor allowances to clear inventory for the lower-margin moderate brands we had planned to exit or sell, the negative impact in the prior period of excess production capacity in the Mexican operations that we sold in May 2008, and lower levels of air shipments in the current period.

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        Wholesale footwear and accessories gross profit margins were 26.5% and 29.0% for the first fiscal nine months of 2008 and 2007, respectively. The decrease was due to higher levels of sales to off-price retailers to liquidate excess inventory, growth in our lower-margin international business and increased production costs in China and other Pacific Rim countries in the current period.

        Retail gross profit margins were 51.0% and 48.6% for the first fiscal nine months of 2008 and 2007, respectively. The increase was primarily the result of lower levels of excess footwear inventory liquidation in the current period, as the prior period included the liquidation of inventory related to the closing of all of our Stein Mart retail locations.

        Selling, General and Administrative Expenses. SG&A expenses were $809.1 million in the first fiscal nine months of 2008 and $831.2 million in the first fiscal nine months of 2007.

        Wholesale better apparel SG&A expenses decreased $11.6 million, primarily from $7.3 million of cost savings realized in the current period by discontinuing the Anne Klein designer line and $6.8 million of expenses relating to the closing of our Bristol, Pennsylvania warehouse which were recorded in the prior period. These decreases were partially offset by $1.5 million of additional bad debt expense related to the Boscov's bankruptcy filing.

        Wholesale jeanswear SG&A expenses decreased $22.3 million, primarily from cost savings resulting from the exit from some of our moderate apparel product lines during 2007, which were partially offset by $5.8 million of additional bad debt expense related to the bankruptcy filings of Goody's Family Clothing, Inc. ("Goody's"), Mervyn's and Boscov's and $2.5 million of advertising costs related to the launch of l.e.i. at Wal-Mart.

        Wholesale footwear and accessories SG&A expenses increased $14.9 million, primarily due to a $6.7 million increase in salary and employee benefit costs (including the settlement of pension liabilities), a $4.2 million increase in overhead costs, a $2.5 million increase in advertising costs, a $1.4 million increase in severance costs, a $1.1 million increase in postage costs and $1.0 million related to the Goody's and Boscov's bankruptcy filings in the current period, offset by a $2.1 million reduction in professional and consulting fees as compared with the prior period.

        Retail SG&A expenses increased $7.2 million, primarily due to a $3.0 million increase in overhead costs, a $2.5 million increase in depreciation expense, a $2.0 million increase in occupancy costs and a $1.5 million write-off of computer software in the current period, partially offset a $2.0 million reduction in professional fees and a $1.4 million reduction in severance costs compared with the prior period.

        SG&A expenses for the licensing, eliminations and other segment decreased $10.1 million, primarily due to $16.5 million recorded in the prior period relating to the termination of two former executive officers, partially offset by $2.1 million of additional amortization of employee stock options and restricted stock in the current period and $4.3 million of other cost increases, including the effects of foreign currency exchange rates.

        Operating Income. The resulting operating income from continuing operations for the first fiscal nine months of 2008 was $117.2 million, compared with $70.1 million for the first fiscal nine months of 2007, due to the factors described above and $80.5 million of trademark impairments recorded in the previous period.

        Net Interest Expense. Net interest expense from continuing operations was $30.0 million in the first fiscal nine months of 2008, compared with $40.0 million in the first fiscal nine months of 2007. The decrease was primarily the result of no outstanding borrowings under our credit facilities and higher interest income from higher cash balances during the first fiscal nine months of 2008.

        Provision for Income Taxes. The effective income tax rate on continuing operations was 35.5% for the first fiscal nine months of 2008. Excluding the effects of the reversal of deferred tax valuation allowances related to the sale of Barneys, the effective tax rate on continuing operations was 27.5% for the first fiscal nine months of 2007. The increase is due primarily to a lesser impact of the foreign income tax differential relative to pre-tax income in the current period than in the prior period.

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        Net Income and Earnings Per Share. Net income was $57.5 million in the first fiscal nine months of 2008, compared with $400.9 million in the first fiscal nine months of 2007, which included the $258.2 million gain on the sale of Barneys. Diluted earnings per share for the first fiscal nine months of 2008 was $0.68, compared with $3.77 for the first fiscal nine months of 2007, on 20.6% fewer shares outstanding.

LIQUIDITY AND CAPITAL RESOURCES

        Our principal capital requirements have been for working capital needs, capital expenditures, dividend payments, acquisition funding and repurchases of our common stock on the open market. We have historically relied on internally generated funds, trade credit, bank borrowings and the issuance of notes to finance our operations and expansion. As of October 4, 2008, total cash and cash equivalents were $200.3 million, a seasonal decrease of $102.5 million from the $302.8 million reported as of December 31, 2007. We expect cash and cash equivalents to be approximately $300 million at December 31, 2008.

        Cash flows from operating activities of continuing operations provided $7.9 million and used $111.5 million in the first fiscal nine months of 2008 and 2007, respectively. The difference was primarily due to changes in inventory, accounts payable, income taxes payable and accrued expense and other current liabilities levels, partially offset by lower net income in the current period. The change in inventory was primarily due to prior period liquidation of product lines that were being exited or scaled back as part of the moderate sportswear restructuring and higher levels of in-transit wholesale jeanswear inventory in the current period. The change in accounts payable was primarily due to the payment of payables in the prior period relating to the sale of our Polo Jeans Company business to Polo and the timing of payments for inventory and higher levels of wholesale jeanswear in-transit inventory in the current period. The change in income taxes payable is related to the tax effects from the sale of Barneys in the prior period and net tax refunds of $15.9 million received during the current period. The change in accrued expenses and other current liabilities is primarily related to payments of restructuring and severance costs in the current period and accruals in the prior period related to the sale of Barneys.

        Cash flows from investing activities of continuing operations used $69.9 million and provided $782.5 million in the first fiscal nine months of 2008 and 2007, respectively. The difference was primarily due to proceeds from the sale of Barneys in the prior period, offset by our usage of $20.2 million related to our investment in GRI, the proceeds received from the sale of our Mexican operations and lower levels of capital expenditures in the current period.

        Cash flows from financing activities of continuing operations used $38.5 million in the first fiscal nine months of 2008, primarily for the payment of dividends to our common shareholders.

        Cash flows from financing activities from continuing operations used $653.4 million in the first fiscal nine months of 2007. The cash proceeds from the sale of Barneys were primarily used to repay amounts outstanding under our Senior Credit Facilities, repurchase our common stock and to pay dividends to our common shareholders. On July 2, 2007, we redeemed all of our outstanding Barneys 9% Senior Secured Notes Due 2008 at par for a total payment of $3.8 million, which is reported under net cash provided by financing activities of discontinued operations.

        We repurchased no common stock during the first fiscal nine months of 2008 and repurchased $496.9 million during the first fiscal nine months of 2007, including amounts repurchased under the ASR program. As of October 4, 2008, $304.1 million of Board authorized repurchases was still available. We may make additional share repurchases in the future depending on, among other things, market conditions and our financial condition. On June 10, 2008, we received a final delivery of 3.2 million shares upon the conclusion of the ASR program. No cash was required to complete the final delivery of shares. We also received approximately $1.0 million from Goldman as the final settlement of the ASR program, which has been recorded as a reduction of the cost of the shares acquired under the ASR. The combined average price for the shares delivered under the ASR was $19.00 per share.

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        Proceeds from the issuance of common stock to our employees exercising stock options amounted to $0.1 million and $11.1 million in the first fiscal nine months of 2008 and 2007, respectively.

        Prior to June 6, 2008, we had credit agreements with several lending institutions to borrow an aggregate principal amount of up to $1.75 billion under Senior Credit Facilities. These facilities, consisting of a $1.0 billion five-year revolving credit facility expiring in June 2009 and a $750.0 million five-year revolving credit facility expiring in June 2010, could be used for letters of credit or cash borrowings. On June 6, 2008, we amended these facilities. The terms and conditions of the credit facilities remain substantially unchanged, except for modification of the pricing provisions and certain covenants and reduction of the aggregate commitment under the $1.0 billion facility to $500.0 million. At October 4, 2008, $195.7 million of letters of credit were outstanding under the credit facility that expires in June 2009 and no amounts were outstanding under the credit facility that expires in June 2010. Borrowings under the Senior Credit Facilities may also be used for working capital and other general corporate purposes, including permitted acquisitions and stock repurchases. The amended Senior Credit Facilities are unsecured and require us to satisfy a minimum Interest Coverage Ratio, a maximum Covenant Debt to EBITDA Ratio and a minimum Asset Coverage Ratio (each as defined in the Restated Credit Agreements), and contain covenants limiting our ability to (1) incur debt and guaranty obligations, (2) incur liens, (3) make loans, advances, investments and acquisitions, (4) merge or liquidate, (5) sell or transfer assets, (6) pay dividends, repurchase shares, or make distributions to stockholders, and (7) engage in transactions with affiliates. At October 4, 2008, we were in compliance with all of our covenants.

        At October 4, 2008, we also had uncommitted unsecured lines of credit available for up to $106.6 million of letters of credit, under which an aggregate of $21.5 million was outstanding. At April 5, 2008, we also had a C$10.0 million unsecured line of credit in Canada, under which C$0.2 million of letters of credit were outstanding.

        On August 5, 2008, Standard & Poor's removed our corporate credit and senior unsecured debt ratings from credit watch and lowered the ratings to BB from BB+. It further lowered the ratings to BB- on October 29, 2008 while maintaining its previously-assigned negative outlook. On October 20, 2008, Moody's lowered our corporate family and probability of default ratings to Ba2 from Ba1 and assigned a ratings outlook of stable.

        On October 29, 2008, we announced that the Board of Directors had declared a quarterly cash dividend of $0.14 per share to all common stockholders of record as of November 14, 2008 for payment on November 28, 2008.

Economic Outlook
        The current economic environment has resulted in lower consumer confidence and lower retail sales. This trend may lead to further reduced consumer spending which could affect our net sales. Additionally, rising costs combined with reduced consumer spending may reduce our gross profit margins and could affect our compliance with our debt covenants. A violation of our covenants could restrict or prohibit access to our credit facilities. Should restrictions on our credit facilities and these factors occur, they could have a material adverse effect on our business.

        Goody's, Mervyn's and Boscov's filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code on June 9, 2008, July 29, 2008 and August 4, 2008, respectively. As a result, we increased our provision for doubtful accounts by $8.3 million during the first fiscal nine months of 2008. Due to the current and expected future economic conditions in the United States, we may experience increased risk related to the collectibility of our accounts receivable, and we may increase our provision for doubtful accounts during the remainder of 2008 should other of our wholesale customers experience significant financial difficulties. If such conditions lead to defaults that are individually or cumulatively significant, we could experience a material adverse impact to our financial condition, results of operations and/or liquidity.

        The economic turmoil that has arisen in the credit markets and the negative effects of the economic environment on our business may negatively impact our ability to borrow funds in the future. Our $500.0 million Senior Credit Facility expires in June 2009 and our $250.0 million 4.250% Senior Notes mature in November 2009. Under current conditions in the credit markets, there is no assurance that we will be able to replace or refinance these sources of funds. However, we believe that available cash and cash equivalents, funds generated by operations, the $750.0 million Senior Credit Facilities expiring in June 2010 and our other lines of credit will

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provide the financial resources sufficient to meet our foreseeable working capital, dividend, capital expenditure and stock repurchase requirements and fund our contractual obligations and our contingent liabilities and commitments. Although there can be no assurance because of these challenging times for financial institutions, we believe that the participating banks will be willing and able to loan funds to us in accordance with their legal obligations under the Senior Credit Facilities.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

        The market risk inherent in our financial instruments represents the potential loss in fair value, earnings or cash flows arising from adverse changes in interest rates or foreign currency exchange rates. We manage this exposure through regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. Our policy allows the use of derivative financial instruments for identifiable market risk exposures, including interest rate and foreign currency fluctuations. We do not enter into derivative financial contracts for trading or other speculative purposes.

        The primary interest rate exposures on floating rate financing arrangements are with respect to United States and Canadian short-term interest rates. We had approximately $1.3 billion in variable rate credit facilities available at October 4, 2008, under which no cash borrowings were outstanding at October 4, 2008.

        We are exposed to market risk related to changes in foreign currency exchange rates. We have assets and liabilities denominated in certain foreign currencies, and our Canadian subsidiary purchases a portion of its inventory from suppliers who require payment in U.S. Dollars. To minimize our exposure to changes in exchange rates between the Canadian Dollar and the U.S. Dollar, we hedge a portion of our forecasted Canadian U.S. Dollar-denominated inventory purchases. We believe that these financial instruments should not subject us to undue risk due to foreign exchange movements, because gains and losses on these contracts offset losses and gains on the assets, liabilities, and transactions being hedged, up to the notional amount of such contracts. We are exposed to credit-related losses if the counterparty to a financial instrument fails to perform its obligation. However, we do not expect the counterparties, which presently have satisfactory credit ratings, to fail to meet their obligations.

        For further information see "Derivatives" in the Notes to Consolidated Financial Statements.

Item 4. Controls and Procedures

        As required by Exchange Act Rule 13a-15(b), we carried out an evaluation, under the supervision and with the participation of our President and Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based upon this evaluation, our President and Chief Executive Officer and our Chief Financial Officer concluded that both our disclosure controls and procedures and our internal controls and procedures are effective in timely alerting them to material information required to be included in our periodic SEC filings and ensuring that information required to be disclosed by us in these periodic filings is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that our internal controls are effective in ensuring that our financial statements are fairly presented in conformity with generally accepted accounting principles.

        We have made changes to our internal controls and procedures over financial reporting to address the implementation of SAP, an enterprise resource planning ("ERP") system. SAP will integrate our operational and financial systems and expand the functionality of our financial reporting processes. We began the process of implementing SAP throughout Jones Apparel Group, Inc. and our consolidated subsidiaries during the fourth quarter of 2006. During the third fiscal quarter of 2008, no additional businesses were converted to this system. We have adequately controlled the transition to the new processes and controls, with no negative impact to our internal control environment. We expect to continue the implementation of this system to all locations over a multi-year period. As the phased implementation occurs, we will experience changes in internal control over financial reporting each quarter. We expect this ERP system to further advance our control environment by automating manual processes, improving management visibility and standardizing processes as its full capabilities are utilized.
 

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

        We have been named as a defendant in various actions and proceedings arising from our ordinary business activities. Although the amount of any liability that could arise with respect to these actions cannot be accurately predicted, in our opinion, any such liability will not have a material adverse financial effect on us.

Item 5. Other information

Statement Regarding Forward-looking Disclosure

        This Report includes, and incorporates by reference, "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements regarding our expected financial position, business and financing plans are forward-looking statements. The words "believes," "expects," "plans," "intends," "anticipates" and similar expressions identify forward-looking statements. Forward-looking statements also include representations of our expectations or beliefs concerning future events that involve risks and uncertainties, including:

• those associated with the effect of national and regional economic conditions;
• lowered levels of consumer spending resulting from a general economic downturn or lower levels of consumer confidence;
• the tightening of the credit markets and our ability to obtain credit on satisfactory terms;
• the performance of our products within the prevailing retail environment;
• customer acceptance of both new designs and newly-introduced product lines;
• our reliance on a few department store groups for large portions of our business;
• consolidation of our retail customers;
• financial difficulties encountered by our customers;
• the effects of vigorous competition in the markets in which we operate;
• our ability to attract and retain qualified executives and other key personnel;
• our reliance on independent foreign manufacturers;
• changes in the costs of raw materials, labor, advertising and transportation;
• the general inability to obtain higher wholesale prices for our products that we have experienced for many years;
• the uncertainties of sourcing associated with an environment in which general quota has expired on apparel products (while China has agreed to safeguard quota on certain classes of apparel products through 2008, political pressure will likely continue for restraint on importation of apparel);
• our ability to successfully implement new operational and financial computer systems; and
• our ability to secure and protect trademarks and other intellectual property rights.

        All statements other than statements of historical facts included in this Report, including, without limitation, the statements under "Management's Discussion and Analysis of Financial Condition and Results of Operations," are forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, such expectations may prove to be incorrect. Important factors that could cause actual results to differ materially from our expectations ("Cautionary Statements") are disclosed in this Report in conjunction with the forward-looking statements. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the Cautionary Statements. We do not undertake to publicly update or revise our forward-looking statements as a result of new information, future events or otherwise.

Item 6. Exhibits

    See Exhibit Index.

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SIGNATURES

    Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

JONES APPAREL GROUP, INC.
(Registrant)

Date: October 29, 2008 By          /s/ Wesley R. Card
WESLEY R. CARD
 President and Chief Executive Officer

By          /s/ John T. McClain
JOHN T. McCLAIN
Chief Financial Officer

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EXHIBIT INDEX

Exhibit No.	Description of Exhibit
10.1*	Jones Apparel Group, Inc. Severance Plan, as amended, and Summary Plan Description.+
31*	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32o	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

____________
* Filed herewith.
^o Furnished herewith.
+ Management contract or compensatory plan or arrangement.

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EX-10

EXHIBIT 10.1

JONES APPAREL GROUP, INC.
SEVERANCE PLAN AND
SUMMARY PLAN DESCRIPTION

Effective May 31, 2006
(amended September 18, 2008)

PURPOSE OF THE PLAN

The purpose of the Jones Apparel Group, Inc. Severance Plan ("Plan") is to provide severance benefits to eligible employees whose employment with Jones Apparel Group, Inc. (the "Company") and all U.S. domestic Subsidiaries and Affiliates of the Company is terminated involuntarily under the conditions described below.

Except as otherwise provided herein or by the Company in writing after the effective date hereof, this Plan (i) is the sole arrangement of the Company regarding Severance-type benefits to eligible employees and (ii) replaces and supersedes all prior plans, programs, understandings and arrangements providing Severance-type benefits to eligible employees.

Notwithstanding anything to the contrary in this Plan, if an employee is eligible for Severance-type benefits under an employment or other written agreement with the Employer providing for Severance-type benefits ("Alternative Benefits"), such employee shall remain and be eligible for those benefits; provided, that if the amount of Severance-type benefits to which an employee may be entitled under such agreement providing for Alternative Benefits would be greater in the aggregate than the benefits which the Employee would otherwise be eligible to receive under this Plan, then the employee shall not receive benefits under this Plan but instead shall be entitled to receive such Alternative Benefits.

This document contains the official text of the Plan.

DEFINITIONS

Affiliate of any person means another person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first person.

Company means Jones Apparel Group, Inc.

Designated Termination Date means the date specified by an Employer as an employee's last day of active work.
Employer means the Company and all U.S. domestic Subsidiaries and Affiliates of the Company.

Person means an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity.

Plan Administrator means the Company or such other person or committee appointed from time to time by the Company to administer the Plan.

Severance-type benefits means post-termination compensation under any employment agreement or other written agreement between the Employer and the employee or other plan or arrangement maintained by the Employer, other than compensation that is paid solely as consideration for a covenant not to compete with the Employer.

Subsidiary of any person means another person, an amount of the voting securities, other voting rights or voting partnership interests of which is sufficient to elect at least a majority of its board of directors or other governing body or, if there are no such voting interests, more than 50% of the equity interest of which is owned directly or indirectly by such first person.

WARN means the Worker Adjustment and Retraining Notification Act.

ELIGIBLE EMPLOYEES

The benefits under this Plan are limited to corporate employees, as well as retail employees employed by Jones Retail Corporation at the level of District Sales Manager or above, in all instances who are classified by an Employer as regular full-time employees and whose regular place of employment is within the United States. Notwithstanding anything to the contrary, union employees are not eligible under this Plan.

INVOLUNTARY TERMINATION OF EMPLOYMENT

Involuntary Termination

An employee will be eligible for severance benefits under this Plan only if the Plan Administrator, in its sole discretion, determines that the employee's employment has been terminated involuntarily for any of the following reasons:

• Reduction in staff or layoff.
• Position elimination.
• Closure of a business unit.
• Organization restructuring.
• Such other circumstances as the Plan Administrator deems appropriate for the payment of severance benefits.

An employee who terminates employment for any reason prior to his or her Designated Termination Date will not be considered to have terminated employment involuntarily unless (i) his or her Employer provides otherwise in writing, or (ii) he or she has been notified that his or her employment is being terminated due to a reduction in staff or layoff requiring notice under federal or state WARN. Such an employee is, however, required to provide two (2) weeks' prior notice if electing to terminate employment on a date prior to his or her Designated Termination Date.

Termination of Employment Not Eligible for Severance Benefits

Unless the Company provides otherwise in writing, an employee will not be eligible for severance benefits if the Plan Administrator, in its sole discretion, determines that the employee's employment is terminated for any of the following reasons:

• Resignation or other voluntary termination of employment.

2

• Failure to return to work upon the expiration of an authorized leave of absence.
• Death or disability.
• Termination for cause or for behavior prejudicial to the Employer, as determined by the Plan Administrator in its sole discretion.
• Termination for gross misconduct or violation of company policy.
• Termination for poor performance.

An employee who terminates employment for any reason prior to his or her Designated Termination Date will not be considered to have terminated employment involuntarily unless (i) his or her Employer provides otherwise in writing, or (ii) he or she has been notified that his or her employment is being terminated due to a reduction in staff or layoff requiring notice under federal or state WARN. Such an employee is, however, required to provide two (2) weeks' prior notice if electing to terminate employment on a date prior to his or her Designated Termination Date.

Other Employment Offer

Unless the Company provides otherwise in writing, or except as expressly provided in this Plan, an employee will not be eligible to receive benefits under this Plan if the Plan Administrator, in its sole discretion, determines that any of the following events has occurred prior to the employee's Designated Termination Date:

• The employee has been offered, but has refused to accept, a suitable position with the Company or any of its Subsidiaries or Affiliates; OR
• The employee's employment is being terminated in connection with a sale or transfer, merger, establishment of a joint venture, or other corporate transaction, and the employee has been offered a suitable position by the successor employer; OR
• The employee's employment is being terminated in connection with the "outsourcing" of operational functions and he or she has been offered a suitable position by the outsourcing vendor.

CONDITIONS FOR PAYMENT OF SEVERANCE BENEFITS

An employee who is involuntarily terminated will not receive severance benefits under this Plan unless the Plan Administrator, in its sole discretion, determines that the employee has satisfied all of the following conditions:

• Work Until Last Day Designated

The employee must continue to be actively at work through his or her Designated Termination Date or such earlier date as may be specified by his or her Employer in writing, unless the employee is absent due to vacation, temporary layoff, or an approved absence from work (including leave under the Family and Medical Leave Act).

This section does not apply to employees whose employment is being terminated due to a reduction in force or layoff requiring notice under federal or state WARN. Such employees are required, however, to provide two (2) weeks' prior notice.

3

• Execution of Release and Other Separation Documents

The employee must execute and deliver to the Company, within the period of time specified by the Company, an agreement in a form satisfactory to the Company containing a general release of claims in favor of the Company and such other terms and provisions as may be determined by the Company in its sole discretion.

• Return of Company Property and Settlement of Expenses

The employee must return all company property and satisfactorily settle all expenses owed to the Company and any of its Subsidiaries or Affiliates.

SEVERANCE BENEFITS

The severance benefits to be provided to an eligible employee will be determined in accordance with the Severance Benefit Guidelines attached to this Plan subject to the reductions set forth below; provided, that the Company has the right, in its sole discretion, and on a case-by case basis, to determine the amount of severance benefits to be provided to an eligible employee.

• Reduction for Other Severance Benefits

In the event that an employee

• is entitled to receive Severance-type benefits under another plan or arrangement maintained by the Employer, or

• is covered by an employment agreement or other written agreement with the Employer providing for Severance-type benefits,

then the severance benefits payable to the employee under this Plan will be reduced by the amount of Severance-type benefits payable to the employee under such other plan, arrangement or agreement, unless the Company provides otherwise in writing. For the avoidance of doubt, if the Severance-type benefits payable under such other plan, arrangement or agreement are greater in the aggregate than the severance benefits payable to the employee under this Plan, then the employee shall not receive benefits under this Plan, and shall instead receive the Severance-type benefits under such other plan, arrangement or agreement.

REEMPLOYMENT

The following rules apply if an employee is reemployed by the Company or any of its Subsidiaries, Affiliates or successors.

• Right to Terminate Benefits

Notwithstanding anything in this Plan to the contrary, in the event that an employee is reemployed before the completion of the scheduled payment of severance benefits, then an Employer shall have the right to terminate the benefits payable under this Plan at any time.

4

• Repayment of Severance Pay

In the event that an employee is offered reemployment within thirty (30) days after payment of his or her severance pay has commenced and subsequently accepts reemployment, then the employee shall repay to the Company the full amount of severance pay that he or she has received under this Plan.

RIGHT TO TERMINATE BENEFITS

Notwithstanding anything in this Plan to the contrary, in the event that the Plan Administrator determines that an employee has breached any of the terms and conditions set forth in any agreement executed by the employee as a condition to receiving benefits under this Plan, including, but not limited to, the general release of claims, then the Company shall have the right to terminate the benefits payable under this Plan at any time.

GENERAL RULES

• Right to Withhold Taxes

The Company shall withhold such amounts from payments under this Plan as it determines necessary to fulfill any federal, state, or local wage or compensation withholding requirements.

• No Right to Continued Employment

Neither the Plan nor any action taken with respect to it shall confer upon any person the right to continue in the employ of the Company or any of its Subsidiaries or Affiliates.

• Benefits Non-Assignable

Benefits under the Plan may not be anticipated, assigned or alienated.

• Unfunded Plan

The Company will make all payments under the Plan, and pay all expenses of the Plan, from its general assets. Nothing contained in this Plan shall give any eligible employee any right, title or interest in any property of the Company or any of its Affiliates nor shall it create any trust relationship.

• Governing Laws and Time Limit for Beginning Legal Actions

The provisions of the Plan shall be construed, administered and enforced according to applicable federal law and, where appropriate, the laws of the State of New York without reference to its conflict of laws rules and without regard to any rule of any jurisdiction that would result in the application of the law of another jurisdiction.

No action relating to this Plan or any release or other agreement entered into with respect to this Plan may be brought later than the earlier of second anniversary of the termination of employment or other event giving rise to the claim.

5

• Severability

The provisions of the Plan are severable. If any provision of the Plan is deemed legally or factually invalid or unenforceable to any extent or in any application, then the remainder of the provisions of the Plan, except to such extent or in such application, shall not be affected, and each and every provision of the Plan shall be valid and enforceable to the fullest extent and in the broadest application permitted by law.

• Section Headings

Section headings are used herein for convenience of reference only and shall not affect the meaning of any provision of this Plan.

ADMINISTRATION OF THE PLAN

The Plan Administrator shall have sole authority and discretion to administer and construe the terms of this Plan, subject to applicable requirements of law. Without limiting the generality of the foregoing, the Plan Administrator shall have complete discretionary authority to carry out the following powers and duties:

• To make and enforce such rules and regulations as it deems necessary or proper for the efficient administration of the Plan;
   
• To interpret the Plan, its interpretation thereof to be final and conclusive on all persons claiming benefits under the Plan;

• To decide all questions, including without limitation, issues of fact, concerning the Plan, including the eligibility of any person to participate in, and receive benefits under, the Plan; and
   
• To appoint such agents, counsel, accountants, consultants and other persons as may be required to assist in administering the Plan.

CLAIMS PROCEDURE

The Plan Administrator reviews and authorizes payment of severance benefits for those employees who qualify under the provisions of the Plan. No claim forms need be submitted. Questions regarding payment of the severance benefits should be directed to Vice President, Benefits or the Plan Administrator.

If an employee feels he or she is not receiving severance benefits which are due, the employee should file a written claim for the benefits with a Vice President in the Human Resources Department. A decision on whether to grant or deny the claim will be made within 90 days following receipt of the claim. If more than 90 days is required to render a decision, the employee will be notified in writing of the reasons for delay. In any event, however, a decision to grant or deny a claim will be made by not later than 180 days following the initial receipt of the claim.

If the claim is denied in whole or in part, the employee will receive a written explanation of the specific reasons for the denial, including a reference to the Plan provisions on which the denial is based.

6

If the employee wishes to appeal this denial, the employee may write within 60 days after receipt of the notification of denial. The claim will then be reviewed by the Plan Administrator and the employee will receive written notice of the final decision within 60 days after the request for review. If more than 60 days is required to render a decision, the employee will be notified in writing of the reasons for delay before the end of the initial 60 day period. In any event, however, the employee will receive a written notice of the final decision within 120 days after the request for review.

AMENDMENT AND TERMINATION

The Company may amend, modify or terminate this Plan with respect to any employee or group of employees at any time pursuant to a writing executed by any duly authorized officer of the Company. Such amendment, modification or termination will be effective with respect to employees who have not received notice of a Designated Termination Date on the date such amendment is executed.

STATEMENT OF ERISA RIGHTS

As a participant in this Plan you are entitled to certain rights and protections under the Employee Retirement Income Security Act of 1974 (ERISA). ERISA provides that all plan participants shall be entitled to:

• Receive Information About Your Plan and Benefits

Examine, without charge, at the plan administrator's office and at other specified locations all documents governing the plan and a copy of the latest annual report (Form 5500 Series) required to be filed by the plan with the U.S. Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration.

Obtain, upon written request to the plan administrator, copies of documents governing the operation of the plan and copies of the latest annual report (Form 5500 Series), if any required, and updated summary plan description. The administrator may make a reasonable charge for the copies.

Receive a summary of the plan's annual financial report. The plan administrator is required by law to furnish each participant with a copy of this summary annual report.

• Prudent Actions by Plan Fiduciaries

In addition to creating rights for plan participants ERISA imposes duties upon the people who are responsible for the operation of the employee benefit plan. The people who operate your plan, called "fiduciaries" of the plan, have a duty to do so prudently and in the interest of you and other plan participants and beneficiaries. No one, including your employer, or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a welfare benefit or exercising your rights under ERISA.

• Enforce Your Rights

If your claim for a severance benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules.

7

Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request a copy of plan documents or the latest annual report from the plan and do not receive them within thirty (30) days, you may file suit in a Federal court. In such a case, the court may require the plan administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the administrator. If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or Federal court. If it should happen that plan fiduciaries misuse the plan's money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a Federal court. The court will decide who should pay court costs and legal fees. If you are successful the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous.

• Assistance with Your Questions

If you have any questions about your plan, you should contact the plan administrator. If you have any questions about this statement or about your rights under ERISA, or if you need assistance in obtaining documents from the plan administrator, you should contact the nearest office of the Pension and Welfare Benefits Administration, U.S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210. You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.

ADDITIONAL INFORMATION

Plan Sponsor:	Jones Apparel Group, Inc. 180 Rittenhouse Circle Keystone Park Bristol, Pennsylvania 19007 (215) 785-4000
Employer Identification Number (EIN):	06-0935166
Plan Name:	Jones Apparel Group, Inc. Severance Plan
Type of Plan:	Welfare benefit plan - severance pay
Plan Year:	Calendar year
Plan Number:	550
Plan Administrator:	Executive Vice President of Human Resources Jones Apparel Group, Inc. 180 Rittenhouse Circle Keystone Park Bristol, Pennsylvania 19007

8

Agent for Service of Legal Process: Plan Administrator

9

JONES APPAREL GROUP, INC. SEVERANCE PLAN
SEVERANCE BENEFIT GUIDELINES

Effective as of May 31, 2006

EMPLOYEES BELOW VICE PRESIDENT

An employee may elect to receive either the severance benefits described in OPTION ONE or OPTION TWO below. The election must be made within the time period, and in accordance with the procedures, specified by the Plan Administrator.

• OPTION ONE - Severance Pay and Payment of Cost for COBRA Coverage

• Severance Pay

2 weeks of Base Pay for each Year of Service

• Minimum of 2 weeks of Base Pay
• Maximum of 26 weeks of Base Pay

The Company shall pay the severance pay in a single lump sum as soon as practicable after the later of the employee's last day of employment or the date on which the employee's separation agreement and general release becomes effective, provided that if the employee satisfies all of the conditions for payment, then in no event will payment be made later than the March 15th of the calendar year following the calendar year in which the employee's last day of employment occurred.

• Continued Group Health Benefit Coverage - Payment of Cost for COBRA Coverage

If the employee elects to continue coverage under the Company's group health benefits plan in accordance with the COBRA continuation coverage requirements, the employee will be required to pay only a portion of the full cost for COBRA coverage during the period equal to the number of weeks used in calculating the amount of the employee's severance pay under this Plan.

• The COBRA coverage cost to be paid by the employee during this severance period will be the same as the amount paid by active employees for the same group health benefits coverage.

After the end of the severance period, the employee, if eligible, will be required to pay the full cost of COBRA coverage in order to continue COBRA coverage for the remainder of the COBRA coverage period.

• OPTION TWO - Severance Pay ONLY

2 weeks of Base Pay for each Year of Service

• Minimum of 2 weeks of Base Pay
• NO maximum

10

The Company shall pay the severance pay in a single lump sum as soon as practicable after the later of the employee's last day of employment or the date on which the employee's separation agreement and general release becomes effective, provided that if the employee satisfies all of the conditions for payment, then in no event will payment be made later than the March 15th of the calendar year following the calendar year in which the employee's last day of employment occurred.

• Definitions

For purposes of determining the amount of severance pay -

• Base Pay means the employee's regular rate of salary (determined on a weekly basis) payable immediately preceding his or her date of termination. Base Pay does not include discretionary bonuses, other variable compensation, or extra pay.
   
• Years of Service means an employee's full and partial years of employment beginning as of the later of (a) his or her most recent date of hire by an Employer or (b) his or her first day of work following a break in service of thirty (30) days or more, until his or her last day of active employment. A partial year of employment will be rounded up to the next highest year.

11

JONES APPAREL GROUP, INC. SEVERANCE PLAN
SEVERANCE BENEFIT GUIDELINES

Effective as of May 31, 2006

VICE PRESIDENTS AND ABOVE BUT BELOW
THE LEVEL OF EXECUTIVE VICE PRESIDENT

• Severance Pay

• Amount of Severance Pay

Years of Service	Amount of Severance Pay
Less than 5 years	3 months of Base Pay
5 to 9 years	6 months of Base Pay
10 or more years	12 months of Base Pay

 
For purposes of determining the amount of severance pay -

• Base Pay means the employee's regular rate of salary (determined on a monthly basis) payable immediately preceding his or her date of termination. Base Pay does not include discretionary bonuses, other variable compensation, or extra pay.
   

• Years of Service means an employee's full and partial years of employment beginning as of the later of (a) his or her most recent date of hire by an Employer or (b) his or her first day of work following a break in service of thirty (30) days or more, until his or her last day of active employment. A partial year of employment will be rounded up to the next highest year.

• Payment of Severance Pay

The Company shall pay the severance pay in a single lump sum as soon as practicable after the later of the employee's last day of employment or the date on which the employee's separation agreement and general release becomes effective, provided that if the employee satisfies all of the conditions for payment, then in no event will payment be made later than the March 15th of the calendar year following the calendar year in which the employee's last day of employment occurred.

• Continued Group Health Benefit Coverage - Payment of Cost for COBRA Coverage

If the employee elects to continue coverage under the Company's group health benefits plan in accordance with the COBRA continuation coverage requirements, the employee will be required to pay only a portion of the full cost for COBRA coverage during the period equal to the number of weeks used in calculating the amount of the employee's severance pay under this Plan.

12

• The COBRA coverage cost to be paid by the employee during this severance period will be the same as the amount paid by active employees for the same group health benefits coverage.

After the end of the severance period, the employee, if eligible, will be required to pay the full cost of COBRA coverage in order to continue COBRA coverage for the remainder of the COBRA coverage period.

13

JONES APPAREL GROUP, INC. SEVERANCE PLAN
SEVERANCE BENEFIT GUIDELINES

Effective as of May 31, 2006

EXECUTIVE VICE PRESIDENTS AND ABOVE

• Severance Pay

• Amount of Severance Pay

Years of Service	Amount of Severance Pay
Less than 5 years	3 months of Base Pay
5 to 9 years	6 months of Base Pay
10 to 19 years	12 months of Base Pay
20 or more years	18 months of Base Pay

For purposes of determining the amount of severance pay -

• Base Pay means the employee's regular rate of salary (determined on a monthly basis) payable immediately preceding his or her date of termination. Base Pay does not include discretionary bonuses, other variable compensation, or extra pay.
• Years of Service means an employee's full and partial years of employment beginning as of the later of (a) his or her most recent date of hire by an Employer or (b) his or her first day of work following a break in service of thirty (30) days or more, until his or her last day of active employment. A partial year of employment will be rounded up to the next highest year.

• Payment of Severance Pay

The Company shall pay the severance pay in a single lump sum as soon as practicable after the later of the employee's last day of employment or the date on which the employee's separation agreement and general release becomes effective, provided that if the employee satisfies all of the conditions for payment, then in no event will payment be made later than the March 15th of the calendar year following the calendar year in which the employee's last day of employment occurred.

• Continued Group Health Benefit Coverage - Payment of Cost for COBRA Coverage

If the employee elects to continue coverage under the Company's group health benefits plan in accordance with the COBRA continuation coverage requirements, the employee will be required to pay only a portion of the full cost for COBRA coverage during the period equal to the number of weeks used in calculating the amount of the employee's severance pay under this Plan, or, if earlier, until the expiration of COBRA coverage.

14

• The COBRA coverage cost to be paid by the employee during this severance period will be the same as the amount paid by active employees for the same group health benefits coverage.

After the end of the severance period, the employee, if eligible, will be required to pay the full cost of COBRA coverage in order to continue COBRA coverage for the remainder of the COBRA coverage period.

• Outplacement

As determined by the Company.

15

EX-31

EXHIBIT 31

CERTIFICATIONS

I, Wesley R. Card, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Jones Apparel Group, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
		(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
		(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
		(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
		(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
		(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
		(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: October 29, 2008
 

/s/ Wesley R. Card
Wesley R. Card
President and Chief Executive Officer

I, John T. McClain, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Jones Apparel Group, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
		(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
		(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
		(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
		(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
		(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
		(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: October 29, 2008
 

/s/ John T. McClain
John T. McClain
Chief Financial Officer

EX-32

EXHIBIT 32

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

    I, Wesley R. Card, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Jones Apparel Group, Inc. on Form 10-Q for the fiscal quarter ended October 4, 2008 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Jones Apparel Group, Inc.

By: /s/ Wesley R. Card

Name: Wesley R. Card
Title: President and Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to Jones Apparel Group, Inc. and will be retained by Jones Apparel Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

    I, John T. McClain, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Jones Apparel Group, Inc. on Form 10-Q for the fiscal quarter ended October 4, 2008 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Jones Apparel Group, Inc.

By: /s/ John T. McClain

Name: John T. McClain
Title: Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to Jones Apparel Group, Inc. and will be retained by Jones Apparel Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.