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 April 2, 2011

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

THE JONES 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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" 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 April 27, 2011
 87,453,321

THE JONES GROUP INC.

Index		Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
	Consolidated Balance Sheets     April 2, 2011, April 3, 2010 and December 31, 2010	3
	Consolidated Statements of Operations     Fiscal Quarters ended April 2, 2011 and April 3, 2010	4
	Consolidated Statements of Changes in Equity     Fiscal Quarters ended April 2, 2011 and April 3, 2010	5
	Consolidated Statements of Cash Flows     Fiscal Quarters ended April 2, 2011 and April 3, 2010	6
	Notes to Consolidated Financial Statements	7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		23
Item 3. Quantitative and Qualitative Disclosures About Market Risk		29
Item 4. Controls and Procedures		31
PART II. OTHER INFORMATION
Item 1. Legal Proceedings		31
Item 5. Other Information		31
Item 6. Exhibits		32
Signatures		33
Exhibit Index		34

DEFINITIONS

        As used in this Report, unless the context requires otherwise, "Jones," "our," "us" and "we" means The Jones Group Inc. and consolidated subsidiaries, "GRI" means GRI Group Limited, "FASB" means the Financial Accounting Standards Board, "ASC" means the "FASB Accounting Standards Codification^TM", "ASU" means "Accounting Standards Update" and "SEC" means the United States Securities and Exchange Commission.

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

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

			April 2, 2011			April 3, 2010			December 31, 2010
ASSETS			(Unaudited	)		(Unaudited	)
CURRENT ASSETS:
	Cash and cash equivalents	$	306.5		$	222.2		$	200.8
	Accounts receivable		506.4			441.4			345.6
	Inventories, primarily finished goods		452.6			353.6			465.9
	Prepaid and refundable income taxes		0.5			0.2			18.7
	Deferred taxes		31.3			30.4			28.0
	Prepaid expenses and other current assets		39.0			35.1			32.1
	TOTAL CURRENT ASSETS		1,336.3			1,082.9			1,091.1
PROPERTY, PLANT AND EQUIPMENT, at cost, less accumulated depreciation and amortization of $570.0, $544.8 and $553.1			245.0			231.7			226.4
GOODWILL			161.8			46.7			161.8
OTHER INTANGIBLES, at cost, less accumulated amortization			725.0			584.6			726.7
INVESTMENT IN AND LOANS TO UNCONSOLIDATED AFFILIATE			42.6			39.7			40.2
OTHER ASSETS			94.8			69.7			86.2
	TOTAL ASSETS	$	2,605.5		$	2,055.3		$	2,332.4
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
	Current portion of long-term debt and capital lease obligations	$	1.9		$	2.3		$	1.8
	Current portion of acquisition consideration payable		21.9			-			14.1
	Accounts payable		177.1			160.4			213.4
	Income taxes payable		0.2			11.3			-
	Accrued employee compensation and benefits		30.7			27.5			49.3
	Accrued expenses and other current liabilities		93.6			77.3			93.1
	TOTAL CURRENT LIABILITIES		325.4			278.8			371.7
NONCURRENT LIABILITIES:
	Long-term debt		809.6			499.5			509.9
	Obligations under capital leases		24.7			26.5			25.2
	Deferred taxes		14.0			9.3			0.3
	Income taxes payable		6.4			8.4			6.3
	Acquisition consideration payable		193.5			21.0			201.3
	Other noncurrent liabilities		71.0			76.1			79.4
	TOTAL NONCURRENT LIABILITIES		1,119.2			640.8			822.4
	TOTAL LIABILITIES		1,444.6			919.6			1,194.1
COMMITMENTS AND CONTINGENCIES			-			-			-
EQUITY:
	Preferred stock, $.01 par value - shares authorized 1.0;  none issued		-			-			-
	Common stock, $.01 par value - shares authorized 200.0; issued 87.5, 158.5 and 86.4		0.9			1.6			0.9
	Additional paid-in capital		545.2			1,367.8			541.9
	Retained earnings		620.0			1,599.3			603.8
	Accumulated other comprehensive loss		(5.4	)		(6.9	)		(8.4	)
	Treasury stock, 71.4 shares at April 3, 2010, at cost		-			(1,826.3	)		-
	TOTAL JONES STOCKHOLDERS' EQUITY		1,160.7			1,135.5			1,138.2
	Noncontrolling interest		0.2			0.2			0.1
	TOTAL EQUITY		1,160.9			1,135.7			1,138.3
	TOTAL LIABILITIES AND EQUITY	$	2,605.5		$	2,055.3		$	2,332.4

See accompanying notes to consolidated financial statements

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

	Fiscal Quarter Ended
		April 2, 2011		April 3, 2010
Net sales	$	949.0	$	876.1
Licensing income		12.1		11.0
Other revenues		0.2		0.2
Total revenues		961.3		887.3
Cost of goods sold		630.6		561.1
Gross profit		330.7		326.2
Selling, general and administrative expenses		269.5		249.9
Operating income		61.2		76.3
Interest income		0.2		0.4
Interest expense and financing costs		21.3		12.4
Equity in income (loss) of unconsolidated affiliate		1.3		(1.8	)
Income before provision for income taxes		41.4		62.5
Provision for income taxes		15.5		23.1
Net income		25.9		39.4
Less: income attributable to noncontrolling interest		0.2		0.2
Income attributable to Jones	$	25.7	$	39.2
Earnings per common share attributable to Jones
Basic	$	0.30	$	0.46
Diluted		0.30		0.45
Weighted-average common shares outstanding
Basic		82.2		82.0
Diluted		83.4		82.4
Dividends declared per share	$	0.05	$	0.05

See accompanying notes to consolidated financial statements

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

		Number of common shares outstanding			Total equity			Common stock		Additional paid-in capital			Retained earnings			Accumulated other comprehensive loss			Treasury stock			Non-controlling interest
Balance, January 1, 2010		85.4		$	1,092.5		$	1.6	$	1,360.3		$	1,564.4		$	(7.6	)	$	(1,826.3	)	$	0.1
Fiscal quarter ended April 3, 2010:
Comprehensive income:
	Net income	-			39.4			-		-			39.2			-			-			0.2
	Change in fair value of cash flow hedges	-			(0.1	)		-		-			-			(0.1	)		-			-
	Reclassification adjustment for hedge gains and losses included in net income	-			0.1			-		-			-			0.1			-			-
	Foreign currency translation adjustments	-			0.7			-		-			-			0.7			-			-
	Total comprehensive income				40.1
Issuance of restricted stock to employees, net of forfeitures		1.7			-			-		-			-			-			-			-
Amortization expense in connection with employee stock options and restricted stock		-			9.2			-		9.2			-			-			-			-
Distributions to noncontrolling interest		-			(0.1	)		-		-			-			-			-			(0.1	)
Tax effects from vesting of restricted stock		-			(1.6	)		-		(1.6	)		-			-			-			-
Tax effects of expired employee stock options		-			(0.1	)		-		(0.1	)		-			-			-			-
Dividends on common stock ($0.05 per share)		-			(4.3	)		-		-			(4.3	)		-			-			-
Balance, April 3, 2010		87.1		$	1,135.7		$	1.6	$	1,367.8		$	1,599.3		$	(6.9	)	$	(1,826.3	)	$	0.2
Balance, January 1, 2011		86.4		$	1,138.3		$	0.9	$	541.9		$	603.8		$	(8.4	)	$	-		$	0.1
Fiscal quarter ended April 2, 2011:
Comprehensive income:
	Net income	-			25.9			-		-			25.7			-			-			0.2
	Change in fair value of cash flow hedges, net of $0.2 tax benefit	-			(0.4	)		-		-			-			(0.4	)		-			-
	Reclassification adjustment for hedge gains and losses included in net income, net of $0.1 tax benefit	-			0.1			-		-			-			0.1			-			-
	Foreign currency translation adjustments	-			3.3			-		-			-			3.3			-			-
	Total comprehensive income				28.9
Issuance of restricted stock to employees, net of forfeitures		1.8			-			-		-			-			-			-			-
Amortization expense in connection with restricted stock		-			8.2			-		8.2			-			-			-			-
Distributions to noncontrolling interest		-			(0.1	)		-		-			-			-			-			(0.1	)
Tax effects from vesting of restricted stock		-			1.0			-		1.0			-			-			-			-
Tax effects of expired employee stock options		-			(1.1	)		-		(1.1	)		-			-			-			-
Treasury stock acquired		(0.7	)		(10.0	)		-		(4.8	)		(5.2	)		-			-			-
Dividends on common stock ($0.05 per share)		-			(4.4	)		-		-			(4.4	)		-			-			-
Other		-			0.1			-		-			0.1			-			-			-
Balance, April 2, 2011		87.5		$	1,160.9		$	0.9	$	545.2		$	620.0		$	(5.4	)	$	-		$	0.2

See accompanying notes to consolidated financial statements

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

			Fiscal Quarter Ended
				April 2, 2011			April 3, 2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income			$	25.9		$	39.4
Adjustments to reconcile net income to net cash used in operating activities, net of acquisitions:
	Amortization of employee stock options and restricted stock			8.2			9.2
	Depreciation and other amortization			18.5			20.9
	Impairment losses on property, plant and equipment			1.6			0.7
	Adjustments to acquisition consideration payable			8.7			0.8
	Equity in (income) loss of unconsolidated affiliate			(1.3	)		1.8
	Provision for (recovery of) losses on accounts receivable			0.2			(0.3	)
	Deferred taxes			9.7			11.1
	Fair value adjustments related to interest rate swaps and cap			2.2			-
	Other items, net			0.2			0.2
	Changes in operating assets and liabilities:
		Accounts receivable		(159.8	)		(136.2	)
		Inventories		13.9			23.0
		Prepaid expenses and other current assets		(6.7	)		(9.2	)
		Other assets		(3.8	)		(2.7	)
		Accounts payable		(36.4	)		(25.2	)
		Income taxes payable/prepaid income taxes		18.4			10.8
		Accrued expenses and other current liabilities		(21.7	)		(23.3	)
		Acquisition consideration payable		(4.5	)		-
		Other liabilities		(10.1	)		(7.2	)
		Total adjustments		(162.7	)		(125.6	)
	Net cash used in operating activities			(136.8	)		(86.2	)
CASH FLOWS FROM INVESTING ACTIVITIES:
	Capital expenditures			(32.9	)		(8.7	)
	Acquisition of Moda Nicola International, LLC			-			(11.5	)
	Net cash used in investing activities			(32.9	)		(20.2	)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Issuance of 6.875% Senior Notes due 2019			300.0			-
	Debt issuance costs			(6.4	)		-
	Dividends paid			(4.3	)		(4.3	)
	Acquisition of treasury stock			(10.0	)		-
	Payments of acquisition consideration payable			(4.2	)		-
	Other items, net			1.0			(0.8	)
	Net cash provided by (used in) financing activities			276.1			(5.1	)
EFFECT OF EXCHANGE RATES ON CASH				(0.7	)		0.3
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS				105.7			(111.2	)
CASH AND CASH EQUIVALENTS, BEGINNING				200.8			333.4
CASH AND CASH EQUIVALENTS, ENDING			$	306.5		$	222.2

See accompanying notes to consolidated financial statements

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

BASIS OF PRESENTATION

        The consolidated financial statements include the accounts of The Jones 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 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. The foregoing interim results are not necessarily indicative of the results of operations for the full year ending December 31, 2011.

        Distribution costs. Our cost of sales may not be comparable to those of other entities, since some entities include all of the costs associated with their distribution functions in cost of sales while we include these costs in selling, general and administrative ("SG&A") expenses. Distribution costs included in SG&A expenses for the fiscal quarters ended April 2, 2011 and April 3, 2010 were $25.1 million and $25.4 million, respectively.

EARNINGS PER SHARE

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

(In millions, except per share amounts)	Fiscal Quarter Ended
		April 2, 2011		April 3, 2010
Net income	$	25.9	$	39.4
Less: income attributable to noncontrolling interest		0.2		0.2
Income attributable to Jones		25.7		39.2
Less: income allocated to participating securities		0.8		1.7
Income available to common stockholders of Jones	$	24.9	$	37.5
Weighted-average common shares outstanding - basic		82.2		82.0
Effect of dilutive employee stock options and restricted stock		1.2		0.4
Weighted-average common shares outstanding - diluted		83.4		82.4
Earnings per common share attributable to Jones
Basic	$	0.30	$	0.46
Diluted		0.30		0.45

ACQUISITIONS

Moda Nicola International, LLC

        On February 4, 2010, we acquired 100% of the membership interests in Moda Nicola International, LLC ("Moda"), a privately-held designer, marketer and wholesaler of women's contemporary eveningwear and sportswear, and owner of the Robert Rodriguez Collection, for $35.7 million. Under the terms of the agreement, we made cash payments of $14.4 million to the selling members of Moda. We deferred $2.5 million of the purchase price, with payment subject to an indemnification holding period as

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set forth in the acquisition agreement. The selling members of Moda are also entitled to receive future cash payments upon achievement of certain financial targets set within the agreement for the years 2011 through 2014. At the acquisition date, we recorded an acquisition consideration liability for $18.8 million, based on projected revenues and gross margins of the acquired business and a discount factor based on an estimated weighted average cost of capital. Adjustments to this liability are recorded as an SG&A expense in our wholesale better apparel segment. At April 2, 2011, the liability was $22.7 million, with $(0.2) million and $0.8 million recorded as SG&A expenses during the fiscal quarters ended April 2, 2011 and April 3, 2010, respectively.

        We pursued the acquisition of Moda to increase our presence in the contemporary apparel market and to further develop a business portfolio with significant growth opportunities. Moda is reported as part of our wholesale better apparel segment.

        The following table summarizes the fair values of the assets acquired and liabilities assumed from Moda on February 4, 2010.

(In millions)	Amortization life (in months)		Fair Value
Current assets		$	3.2
Property, plant and equipment			0.2
Intangible assets:
Goodwill			6.6
Customer relationships	120		7.9
Trademarks	240		17.0
Covenants not to compete	59		0.2
Order backlog	3		1.7
Total assets acquired			36.8
Current liabilities			1.1
Total purchase price		$	35.7

        The fair value of receivables acquired from Moda was $2.2 million, with gross contractual amounts receivable amounting to $2.7 million.

        The acquisition resulted in the recognition of $6.6 million of goodwill, which is expected to be deductible for tax purposes. Goodwill largely consists of expected synergies resulting from the acquisition, such as manufacturing and supply chain work process improvements and the elimination of redundant corporate overhead for shared services and governance, the acquired assembled workforce, which does not qualify as an amortizable intangible asset, and the potential for product extensions, such as footwear.

        The following table provides total revenues and results of operations from the acquired Moda business included in our results for the fiscal quarter ended April 3, 2010 subsequent to the acquisition.

(In millions)		Fiscal Quarter Ended April 3, 2010
Total revenues	$	4.4
Loss before provision for income taxes		(0.7	)

Stuart Weitzman Holdings, LLC

        On June 2, 2010, we acquired 55% of the membership interests in Stuart Weitzman Holdings, LLC ("SWH"), a privately-held designer and manufacturer of women's salon footwear and accessories under the Stuart Weitzman label. SWH markets its products in fine specialty and department stores worldwide and in its own chain of retail stores in the U.S. and abroad.

        Under the terms of the agreement, the acquisition will occur in two stages. We made an initial cash payment of $180.3 million for a 55% interest in SWH. The purchase of the remaining 45% will occur on

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December 31, 2012. The remaining purchase price will be determined under a formula set forth in the agreement, which is based upon the financial results of SWH from 2010 through 2012. We recorded all SWH's identifiable assets, SWH's liabilities assumed and the noncontrolling interest at fair value under the acquisition method. Due to our obligation to purchase the remaining 45% interest, the noncontrolling interest is classified as a liability, with adjustments to the liability recorded as interest expense. We recorded a liability of $181.8 million for the initial value of the projected payments for the remaining 45% interest, based on probability-weighted projected earnings before interest, taxes, depreciation and amortization (as defined in the agreement) of the acquired business and cash distributions that are required by the agreement to be disbursed for 2010 through 2012, using a discount factor based on an estimated weighted average cost of capital. At April 2, 2011, the fair value of the liability was $191.2 million, with $8.9 million recorded as interest expense and $8.7 million of payments recorded during the fiscal quarter ended April 2, 2011.

        We pursued the acquisition of SWH to increase our presence in the contemporary footwear market and to further develop a business portfolio with significant growth opportunities. SWH's wholesale footwear business is reported in our wholesale footwear and accessories segment, its retail business is reported in our retail segment, and its licensing business is reported in our licensing, eliminations and other segment.

        The following table summarizes the fair values of the assets acquired and liabilities assumed from SWH on June 2, 2010.

(In millions)	Amortization life (in months)		Fair Value
Cash		$	21.0
Accounts receivable			20.1
Inventories			18.9
Other current assets			1.5
Property, plant and equipment			19.4
Intangible assets:
Trademarks			154.1
Goodwill			115.1
Customer relationships	120		20.2
Covenant not to compete	55		3.5
Order backlog	9		10.5
Favorable lease agreements	139		6.1
Licensing agreements	55		3.6
Other noncurrent assets			0.7
Total assets acquired			394.7
Cash distributions payable			19.0
Current liabilities			10.6
Unfavorable lease agreements	73		2.7
Other long-term liabilities			0.3
Total liabilities assumed			32.6
Total purchase price		$	362.1

        The gross contractual accounts receivable acquired from SWH was $24.4 million.

        The acquisition resulted in the recognition of $115.1 million of goodwill, which is expected to be deductible for tax purposes. Goodwill largely consists of expected synergies resulting from the acquisition, such as the elimination of redundant corporate overhead for shared services and governance, the acquired assembled workforce, which does not qualify as an amortizable intangible asset, and the potential for product extensions, such as apparel.

        The following table provides pro forma total revenues and results of operations for the fiscal quarter ended April 3, 2010 as if Moda and SWH had been acquired on January 1, 2009. The unaudited pro forma results reflect certain adjustments related to the acquisitions, such as amortization expense on intangible assets acquired from Moda and SWH resulting from the fair valuation of assets acquired. The

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pro forma results do not include any anticipated cost synergies or other effects of the planned integration of Moda or SWH. Accordingly, such pro forma amounts are not necessarily indicative of the results that actually would have occurred had the acquisitions been completed at the beginning of 2009, nor are they indicative of the future operating results of the combined companies.

(In millions, except per share amounts)
Total revenues	$	944.9
Net income		41.4
Earnings per common share attributable to Jones
Basic		0.48
Diluted		0.48

        The pro forma earnings for the fiscal quarter ended April 3, 2010 were adjusted to exclude $0.6 million of acquisition-related expenses incurred during the quarter and $1.4 million of nonrecurring expense related to the fair value of acquisition-date order backlogs.

Acquisition Expenses

        During the fiscal quarter ended April 3, 2010, pretax charges totaling $0.6 million were recorded for legal expenses and other transactions related to the Moda acquisition. These charges, which were expensed in accordance with the accounting guidance for business combinations, were recorded as SG&A costs in our licensing, other and eliminations segment.

ACCOUNTS RECEIVABLE

        Accounts receivable consist of the following:

(In millions)		April 2, 2011			April 3, 2010			December 31, 2010
Trade accounts receivable	$	544.9		$	476.4		$	374.1
Allowances for doubtful accounts, returns, discounts and co-op advertising		(38.5	)		(35.0	)		(28.5	)
	$	506.4		$	441.4		$	345.6

        Due to our 25% ownership interest in GRI, GRI is deemed to be a related party. Included in accounts receivable are amounts due from GRI in the amount of $18.2 million, $35.1 million and $25.4 million at April 2, 2011, April 3, 2010 and December 31, 2010, respectively. Net revenues from GRI amounted to $14.5 million and $15.1 million for the fiscal quarters ended April 2, 2011 and April 3, 2010, respectively. On April 23, 2009, we converted $10.0 million of the outstanding GRI accounts receivable to a three-year interest-bearing convertible note. GRI has the option, during the 90-day period that begins when the audited financial statements for the GRI fiscal year ending January 31, 2011 become available (or such shorter period that ends on the maturity date of the note), to convert the note into common shares of GRI at a conversion rate based on the greater of eight times the net income of GRI for such fiscal year, or an appraised value determined as of that date.

ACCRUED RESTRUCTURING COSTS

Jewelry

        During 2009, we decided to discontinue the domestic manufacturing, product development and sourcing activities of our jewelry business, and also announced the closing of our jewelry distribution center during 2010. We accrued $0.2 million of lease termination costs in the fiscal quarter ended April 2, 2011 and we accrued $0.1 million of termination benefits and associated employee costs in the fiscal quarter ended April 3, 2010. These costs are reported as SG&A expenses in the wholesale footwear and accessories segment.

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        The details of the jewelry restructuring accruals are as follows:

(In millions)		One-time termination benefits			Lease obligations			Total jewelry restructuring
Balance, January 1, 2010	$	2.9		$	-		$	2.9
Additions		0.1			-			0.1
Payments and reductions		(1.2	)		-			(1.2	)
Balance, April 3, 2010	$	1.8		$	-		$	1.8
Balance, January 1, 2011	$	1.3		$	2.3		$	3.6
Additions		-			0.2			0.2
Payments and reductions		(1.2	)		(0.5	)		(1.7	)
Balance, April 2, 2011	$	0.1		$	2.0		$	2.1

        We utilized $1.2 million of the termination benefits accrual in each of the fiscal quarters ended April 3, 2010 and April 2, 2011 (relating to full or partial severance for 28 and 37 employees, respectively). The net accrual of $1.8 million at April 3, 2010 is reported as accrued expenses and other current liabilities. The net accrual of $2.1 million at April 2, 2011 is reported as $0.6 million of accrued expenses and other current liabilities and $1.5 million of other noncurrent liabilities.

Texas Warehouse

        On December 1, 2009, we announced the closing of warehouse facilities in Socorro, Texas. We accrued $3.4 million of termination benefits and associated employee costs for 220 employees, of which $0.1 million was recorded in the fiscal quarter ended April 3, 2010. During 2010, we also recorded $6.9 million of lease obligation costs relating to the warehouse. These costs are reported as SG&A expenses in the wholesale jeanswear segment. The closing was substantially completed by the end of April 2010.

        The details of the Texas warehouse restructuring accruals are as follows:

(In millions)		One-time termination benefits			Lease obligations			Total Texas warehouse restructuring
Balance, January 1, 2010	$	3.1		$	-		$	3.1
Additions		0.1			-			0.1
Payments and reductions		(0.2	)		-			(0.2	)
Balance, April 3, 2010	$	3.0		$	-		$	3.0
Balance, January 1, 2011	$	-		$	4.1		$	4.1
Payments and reductions		-			(1.1	)		(1.1	)
Balance, April 2, 2011	$	-		$	3.0		$	3.0

        During the fiscal quarter ended April 3, 2010, $0.2 million of the accruals relating to termination benefits were utilized (relating to severance for 28 employees). The net accruals of $3.0 million at both April 3, 2010 and April 2, 2011 are reported as accrued expenses and other current liabilities.

Other Restructurings

        Moderate Apparel Restructuring. In connection with the exit from 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. Prior to 2010, we recorded $2.0 million of lease obligation costs as selling, general and administrative expenses in our wholesale jeanswear segment relating to one of the warehouse facilities. During the fiscal quarter ended April 3, 2010, we reversed $1.3 million of lease obligation costs as SG&A expenses in our wholesale jeanswear segment relating to a sublease of one of the warehouse facilities.

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        Retail Stores. We continue to review our retail operations for underperforming locations. As a result of this review, we have decided to close retail locations that no longer provide strategic benefits. During the fiscal quarters ended April 3, 2010 and April 2, 2011, we closed 61 and 27 locations, respectively, and anticipate closing additional locations in 2011. Total termination benefits and associated employee costs are expected to be $8.2 million for approximately 1,590 employees, including both store employees and administrative support personnel. We recorded $0.1 million and $0.6 million of employee termination costs in the fiscal quarters ended April 3, 2010 and April 2, 2011, respectively. In connection with our decision to close these stores, we reviewed the associated long-term assets for impairments. As a result of this review, we recorded $0.7 million and $1.2 million of impairment losses during the fiscal quarters ended April 3, 2010 and April 2, 2011, respectively, on leasehold improvements and furniture and fixtures located in the stores to be closed. These costs are reported as SG&A expenses in the retail segment.

        California Restructuring. On February 15, 2011, we announced the closing of our Commerce, California design facility. In connection with this closing, we accrued $0.6 million of termination benefits and associated employee costs for 17 employees. These costs are reported as SG&A expenses in our wholesale jeanswear segment.

        The details of these restructuring accruals are as follows:

(In millions)		Moderate restructuring			Retail stores			California restructuring
Balance, January 1, 2010	$	2.0		$	1.9		$	-
(Reversals) additions		(1.3	)		0.1			-
Payments and reductions		(0.2	)		(0.5	)		-
Balance, April 3, 2010	$	0.5		$	1.5		$	-
Balance, January 1, 2011	$	0.3		$	2.2		$	-
Additions		-			0.6			0.6
Payments and reductions		-			(1.5	)		-
Balance, April 2, 2011	$	0.3		$	1.3		$	0.6

        During the fiscal quarters ended April 3, 2010 and April 2, 2011, $0.5 million and $1.5 million of the termination benefits accrual were utilized (relating to partial or full severance for 250 and 234 employees, respectively). The net accrual of $2.0 million at April 3, 2010 is reported as $1.6 million of accrued expenses and other current liabilities and $0.4 million of other noncurrent liabilities. The net accrual of $2.2 million at April 2, 2011 is reported as $2.1 million of accrued expenses and other current liabilities and $0.1 million of other noncurrent liabilities.

GOODWILL

        The following table presents, by segment and in total, changes in the carrying amount of goodwill for the fiscal quarter ended April 3, 2010. There were no changes to our goodwill balances for the fiscal quarter ended April 2, 2011.

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(In millions)		Wholesale Better Apparel		Wholesale Jeanswear			Wholesale Footwear & Accessories			Retail			Total
Balance, January 1, 2010
Goodwill	$	40.1	$	519.2		$	813.2		$	120.6		$	1,493.1
Accumulated impairment losses		-		(519.2	)		(813.2	)		(120.6	)		(1,453.0	)
Net goodwill		40.1		-			-			-			40.1
Addition from acquisition of Moda		6.6		-			-			-			6.6
Balance, April 3, 2010
Goodwill		46.7		519.2			813.2			120.6			1,499.7
Accumulated impairment losses		-		(519.2	)		(813.2	)		(120.6	)		(1,453.0	)
Net goodwill	$	46.7	$	-		$	115.1		$	-		$	46.7
Balance, December 31, 2010 and April 2, 2011
Goodwill		46.7		519.2			928.3			120.6			1,614.8
Accumulated impairment losses		-		(519.2	)		(813.2	)		(120.6	)		(1,453.0	)
Net goodwill	$	46.7	$	-		$	115.1		$	-		$	161.8

FAIR VALUES

        ASC Subtopic 820-10 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. ASC Subtopic 820-10 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. We are permitted to choose to measure many financial instruments and certain other items at fair value, although we did not elect the fair value measurement option for any of our financial assets or liabilities. Our financial assets and liabilities are to be measured using inputs from the three levels of the fair value hierarchy, which are as follows:

• 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

        We have certain financial assets and liabilities that are required to be measured at fair value. These include:

• the assets and liabilities of The Jones Group Inc. Deferred Compensation Plan (the "Rabbi Trust"), which represent deferred employee compensation invested in mutual funds and which fall within Level 1 of the fair value hierarchy;
• deferred director fees, which represent phantom units of our common stock that have a fair value based on the market price of our common stock and which fall within Level 1 of the fair value hierarchy;

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• foreign currency forward contracts, which have fair values based on observable inputs including foreign exchange forward and spot rates and which fall within Level 2 of the fair value hierarchy;
• interest rate swaps and caps, which have fair values based on observable inputs including yield curves and LIBOR rates and which fall within Level 2 of the fair value hierarchy;
• long-term debt that is hedged by interest rate swaps as a fair-value hedge and which falls within Level 2 of the fair value hierarchy; and
• consideration liabilities recorded as a result of the acquisition of Moda and SWH, which have fair values based on our projections of financial results and cash flows for the acquired business and a discount factor based on our weighted average cost of capital, and which fall within Level 3 of the fair value hierarchy.

        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 April 3, 2010, December 31, 2010 and April 2, 2011.

(In millions)
Description	Classification		Total Value		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
April 3, 2010:
Rabbi Trust assets	Prepaid expenses and other current assets	$	8.2	$	8.2	$	-	$	-
	Total assets	$	8.2	$	8.2	$	-	$	-
Rabbi Trust liabilities	Accrued employee compensation and benefits	$	8.2	$	8.2	$	-	$	-
Canadian Dollar - U.S. Dollar forward contracts	Accrued expenses and other current liabilities		0.2		-		0.2		-
Deferred director fees	Accrued expenses and other current liabilities		1.4		1.4		-		-
Acquisition consideration	Acquisition consideration payable, net of current portion		19.6		-		-		19.6
	Total liabilities	$	29.4	$	9.6	$	0.2	$	19.6
December 31, 2010:
Rabbi Trust assets	Prepaid expenses and other current assets	$	9.1	$	9.1	$	-	$	-
Interest rate cap	Other long-term assets		1.3		-		1.3		-
	Total assets	$	10.4	$	9.1	$	1.3	$	-
Rabbi Trust liabilities	Accrued employee compensation and benefits	$	9.1	$	9.1	$	-	$	-
Canadian Dollar - U.S. Dollar forward contracts	Accrued expenses and other current liabilities		0.5		-		0.5		-
Interest rate swaps	Other long-term liabilities		0.6		-		0.6		-
Deferred director fees	Accrued expenses and other current liabilities		1.2		1.2		-		-
Acquisition consideration	Current portion of acquisition consideration payable		14.1		-		-		14.1
5.125% Senior Notes due 2014	Long-term debt		260.0		-		260.0		-
Acquisition consideration	Acquisition consideration payable, net of current portion		199.8		-		-		199.8
	Total liabilities	$	485.3	$	10.3	$	261.1	$	213.9
April 2, 2011:
Rabbi Trust assets	Prepaid expenses and other current assets	$	9.6	$	9.6	$	-	$	-
Interest rate cap	Other long-term assets		1.1		-		1.1		-
	Total assets	$	10.7	$	9.6	$	1.1	$	-
Rabbi Trust liabilities	Accrued employee compensation and benefits	$	9.6	$	9.6	$	-	$	-
Canadian Dollar - U.S. Dollar forward contracts	Accrued expenses and other current liabilities		0.8		-		0.8		-
Interest rate swaps	Other long-term liabilities		2.4		-		2.4		-
Deferred director fees	Accrued expenses and other current liabilities		1.1		1.1		-		-
Acquisition consideration	Current portion of acquisition consideration payable		21.9		-		-		21.9
5.125% Senior Notes due 2014	Long-term debt		258.4		-		258.4		-
Hedged portion of 6.875% Senior Notes due 2019	Long-term debt		151.3		-		151.3		-
Acquisition consideration	Acquisition consideration payable, net of current portion		192.0		-		-		192.0
	Total liabilities	$	637.5	$	10.7	$	412.9	$	213.9

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        The following table presents the changes in Level 3 contingent consideration liability for the fiscal quarters ended April 3, 2010 and April 2, 2011.

(In millions)		Acquisition of Moda			Acquisition of SWH			Total Acquisition Consideration Payable
Beginning balance, January 1, 2010	$	-		$	-		$	-
Acquisition		18.8			-			18.8
Total adjustments included in earnings		0.8			-			0.8
Balance, April 3, 2010	$	19.6		$	-		$	19.6
Beginning balance, January 1, 2011	$	22.9		$	191.0		$	213.9
Payments		-			(8.7	)		(8.7	)
Total adjustments included in earnings		(0.2	)		8.9			8.7
Balance, April 2, 2011	$	22.7		$	191.2		$	213.9

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

        In accordance with the fair value hierarchy described above, the following table shows the fair value of our non-financial assets and liabilities that were required to be measured at fair value on a nonrecurring basis at April 3, 2010 and April 2, 2011, and the total losses recorded as a result of the remeasurement process.

(In millions)			Fair Value Measurements Using
Description		Carrying Value		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total losses recorded for the fiscal quarter
At April 3, 2010:
Property and equipment	$	-	$	-	$	-	$	-	$	0.7
At April 2, 2011:
Property and equipment		-		-		-		-		1.2
Transportation equipment		1.0		0.6		-		-		0.4

        During the fiscal quarters ended April 3, 2010 and April 2, 2011, property and equipment utilized in our retail operations with a carrying amount of $0.7 million and $1.2 million, respectively, were written down to a fair value of zero, primarily as a result of our decision to close underperforming retail locations. These losses were recorded as SG&A expenses in the retail segment. We consider long-term assets utilized in a retail location to be impaired when a pattern of operating losses at the location indicate that future operating losses are probable and that the resulting cash flows will not be sufficient to recover the carrying value of the associated long-term assets. During the fiscal quarter ended April 2, 2011, we determined that certain transportation equipment with a carrying value of $1.0 million had a fair value of $0.6 million based on quoted market prices. The loss of $0.4 million was recorded as SG&A expenses in the licensing, other and eliminations segment.

Financial Instruments

        As a result of our global operating and financing activities, we are exposed to changes in interest rates and foreign currency exchange rates which may adversely affect results of operations and financial condition. In seeking to minimize the risks and/or costs associated with such activities, we manage exposure to changes in interest rates and foreign currency exchange rates through our regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. The instruments eligible for utilization include forward, option and swap agreements. We do not use financial instruments for trading or other speculative purposes. At April 2, 2011, we had

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outstanding foreign exchange contracts to exchange Canadian Dollars for a total notional value of US $15.9 million at a weighted-average exchange rate of $1.02 million maturing through November 2011.

        At April 2, 2011, April 3, 2010 and December 31, 2010, the fair values of cash and cash equivalents, receivables and accounts payable approximated their carrying values due to the short-term nature of these instruments. The fair value of the note receivable from GRI approximates the $10.0 million carrying value as it is a variable-rate instrument. The estimated fair values of other financial instruments subject to fair value disclosures, determined based on broker quotes or quoted market prices or exchange rates for the same or similar instruments, and the related carrying amounts are as follows:

(In millions)	April 2, 2011				April 3, 2010				December 31, 2010
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt, including current portion	$	809.7	$	750.2	$	499.5	$	445.3	$	510.0	$	459.4
Interest rate swaps, net liability		2.4		2.4		-		-		0.6		0.6
Interest rate cap, net asset		1.2		1.2		-		-		1.3		1.3
Canadian Dollar - U.S. Dollar forward contracts, net liability		0.8		0.8		0.2		0.2		0.5		0.5

        Financial instruments expose us to counterparty credit risk for nonperformance and to market risk for changes in interest and currency rates. We manage exposure to counterparty credit risk through specific minimum credit standards, diversification of counterparties and procedures to monitor the amount of credit exposure. Our financial instrument counterparties are substantial investment or commercial banks with significant experience with such instruments.

CREDIT FACILITIES

        We have a secured revolving credit agreement expiring on May 13, 2015 (the "Credit Facility") with several lending institutions to borrow an aggregate principal amount of up to $650 million. Up to the entire amount of the facility is available for cash borrowings, with up to $400 million available for trade letters of credit, up to $50 million available for standby letters of credit, and a subfacility available to our Canadian subsidiaries of up to $25 million for letters of credit and borrowings. Borrowings under the Credit Facility may be used to refinance existing indebtedness and for general corporate purposes in the ordinary course of business. Such borrowings bear interest either based on the alternate base rate, as defined in the Credit Facility, or based on Eurocurrency rates, each with a margin that depends on the availability remaining under the Credit Facility. The Credit Facility contains customary events of default.

        Availability under the Credit Facility is determined with reference to a borrowing base consisting of a percentage of eligible inventory, accounts receivable, credit card receivables and licensee receivables, minus reserves determined by the joint collateral agents. At April 2, 2011, we had no cash borrowings and $21.4 million of letters of credit outstanding, and our remaining availability was $578.8 million. If availability under the Credit Facility falls below a stated level, we will be required to comply with a minimum fixed charge coverage ratio. The Credit Facility also contains affirmative and negative covenants that, among other things, will limit or restrict our ability to (1) incur indebtedness, (2) create liens, (3) merge, consolidate, liquidate or dissolve, (4) make investments (including acquisitions), loans or advances, (5) sell assets, (6) enter into sale and leaseback transactions, (7) enter into swap agreements, (8) make certain restricted payments (including dividends and other payments in respect of capital stock), (9) enter into transactions with affiliates, (10) enter into restrictive agreements, and (11) amend material documents. The Credit Facility is secured by a first priority lien on substantially all of our personal property.

        On April 28, 2011, we completed an amendment and restatement of our Credit Facility. The amended and restated terms and conditions provide for an extension of the maturity date from May 13, 2015 to April 28, 2016. The amendment and restatement also provides for, among other things, the following changes to the Credit Facility: (1) a split of the Credit Facility into a $350 million U.S.

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commitment which may be drawn by the U.S. borrowers as revolving loans or letters of credit in U.S. dollars, and a $300 million international commitment which may be drawn by the U.S. borrowers or by any Canadian or European borrowers as revolving loans or letters of credit in euros, sterling, Canadian dollars, or U.S. dollars; (2) reductions in the interest rate spreads and commitment fees payable under the Credit Facility; (3) the addition of separate borrowing bases in each relevant European country, similar to the U.S. borrowing base (with variations in accordance with local law or practice); (4) changes in the U.S. borrowing base eligibility criteria for inventory in or in transit to Canada; (5) an increase in the cap on swingline loans; (6) reductions in the various availability levels below which (x) dominion periods are triggered, and (y) the borrowers must comply with certain financial and other covenants; (7) increases in various debt baskets, including a lifting of limits on the general unsecured debt basket and on unsecured and secured debt incurred by non-U.S. subsidiaries that are not loan parties, and the addition of a new lien basket for financings secured by intellectual property; (8) increases in various investments baskets and the addition of a new investments basket; (9) an increase in the general asset sales basket; and (10) reductions in the various thresholds to be met before we can make restricted payments or can prepay our bonds maturing in 2014.

        SWH has a $1.5 million unsecured borrowing facility with a lending institution that expires on October 1, 2011 and is renewable on an annual basis, under which no cash borrowings and $1.1 million in letters of credit were outstanding at April 2, 2011. Cash borrowings under this facility bear interest based on either the prevailing prime rate or the prevailing LIBOR rate plus 300 basis points. SWH also has a €0.3 million variable-rate unsecured borrowing facility with a European lending institution that expires in March 2012 and is renewable on an annual basis, under which no amounts were outstanding at April 2, 2011.

DERIVATIVES

        We 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 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.

Interest Rate Swaps and Caps

        On May 27, 2010, we entered into three interest rate swap transactions to effectively convert the entire amount of our $250 million fixed-rate 5.125% Senior Notes due 2014 (the "2014 Notes") to variable-rate debt. Under the terms of the transactions, we were required to make semiannual variable-rate payments to the counterparties calculated based on three-month LIBOR rates (that are reset on the 15th day of each calendar quarter) plus 2.92%, and the counterparties were obligated to make semiannual fixed-rate payments to us of 5.125%. Concurrently, we also entered into an interest rate cap, at a cost of $2.7 million, which limits our three-month LIBOR rate exposure to 5.0%. The swap and cap transactions had an effective date of June 1, 2010 and a termination date of November 15, 2014, the date the 2014 Notes mature. On October 18, 2010, we de-designated the hedging relationship between the swaps and the 2014 Notes and received $10.2 million upon termination of the swaps. The related fair market valuation adjustment to the 2014 Notes will be amortized as a reduction of interest expense over the remaining life of the 2014 Notes.

        On December 14, 2010, we entered into three additional interest rate swap transactions to effectively convert the entire amount of the 2014 Notes to variable-rate debt. Under the terms of the transactions, we are required to make semiannual variable-rate payments to the counterparties calculated based on three-month LIBOR rates (which are reset on the 15th day of each calendar quarter) plus 3.46%, and the counterparties were obligated to make semiannual fixed-rate payments to us of 5.125%. The swap transactions have an effective date of December 17, 2010 and a termination date of November 15, 2014, the date the 2014 Notes mature.

        On March 3, 2011, we entered into three additional interest rate swap transactions to effectively convert $150 million of our $300 million fixed-rate 6.875% Senior Notes due 2019 (the "2019 Notes") to variable-rate debt. Under the terms of the transactions, we are required to make semiannual variable-rate

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payments to the counterparties calculated based on three-month LIBOR rates (which are reset on the 15th day of each calendar quarter) plus 3.73%, and the counterparties were obligated to make semiannual fixed-rate payments to us of 6.875%. The swap transactions have an effective date of March 7, 2011 and a termination date of March 15, 2019, the date the 2019 Notes mature.

        The swap transactions were designated as hedges of the fair value of the related notes. The fair values of the swaps are recorded either as an asset or a liability, with changes in their fair values recorded through interest expense. The changes in fair value of the notes related to the hedged portion of the notes are also recorded through interest expense. As these changes in fair value will not exactly offset each other, the net effect on earnings represents the ineffectiveness of the hedging instruments. We evaluate effectiveness under the "long haul" method of accounting. The interest rate cap has not been designated as a hedging instrument; as a result, all changes in the fair value of the cap are recorded through interest expense.

        We recorded a net increase of $2.1 million in interest expense related to the ineffectiveness of the swaps and a $0.1 million increase in interest expense related to changes in the fair value of the cap during the fiscal quarter ended April 2, 2011.

Foreign Currency Forward Contracts

        We use foreign currency forward contracts for the specific purpose of hedging the exposure to variability in forecasted cash flows associated primarily with inventory purchases. Fair values of foreign currency forward contracts are calculated by comparing each agreement's contractual exchange rate with the currency exchange forward and spot rates at the reporting date.

        We have outstanding forward contracts to exchange Canadian Dollars for U.S. Dollars. These contracts are designated as cash flow hedges as the principal terms of the contracts are the same as the underlying forecasted foreign currency cash flows. Therefore, changes in the fair value of these forward contracts should be highly effective in offsetting changes in the expected foreign currency cash flows, and accordingly, changes in the fair value of these contracts are recorded in accumulated other comprehensive income, net of related tax effects, with the corresponding asset or liability recorded in the balance sheet. Amounts recorded in accumulated other comprehensive income are reflected in current-period earnings when the hedged transaction affects earnings.

        Since the foreign currency derivatives we use in our risk management strategies are highly effective hedges because all the critical terms of the derivative instruments match those of the hedged item, we record no ineffectiveness related to our cash flow hedges. If foreign currency exchange rates do not change from their April 2, 2011 amounts, we estimate that any reclassifications from other comprehensive income to earnings within the next 12 months will not be material.

        The U.S. Dollar notional amounts of our foreign currency forward exchange contracts outstanding at April 2, 2011, which mature at various dates through November 2011, and at April 3, 2010 and December 31, 2010 were $15.9 million, $5.0 million and $20.3 million, respectively.

Fair Values of Derivative Instruments

(In millions)		April 2, 2011			April 3, 2010			December 31, 2010
		Balance Sheet Location		Fair Value	Balance Sheet Location		Fair Value	Balance Sheet Location		Fair Value
Derivatives designated as hedging instruments
	Interest rate swap contracts	Other long-term liabilities	$	2.4		$	-	Other long-term liabilities	$	0.6
	Foreign exchange contracts	Accrued expenses and other current liabilities		0.8	Accrued expenses and other current liabilities		0.2	Accrued expenses and other current liabilities		0.5
	Total derivative liabilities		$	3.2		$	0.2		$	1.1
Derivatives not designated as hedging instruments
	Interest rate cap contract	Other long-term assets	$	1.2		$	-	Other long-term assets	$	1.3

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Effect of Derivatives on the Statement of Operations - Derivatives Designated as Hedging Instruments

(In millions)	Location of Pretax Gain (Loss) due to Ineffectiveness Recognized in Income	Amount of Pretax Gain (Loss) due to Ineffectiveness Recognized in Income
Derivate type			Fiscal Quarter Ended April 2, 2011			Fiscal Quarter Ended April 3, 2010
Interest rate swap contracts	Interest expense	$	(2.1	)	$	-

(In millions)	Amount of Pretax Gain (Loss) Recognized in Other Comprehensive Income			Amount of Pretax Gain (Loss) Reclassified from Other Comprehensive Income into Income
Derivative type	Fiscal Quarter Ended April 2, 2011	Fiscal Quarter Ended April 3, 2010	Location of Pretax Gain (Loss) Reclassified from Other Comprehensive Income into Income	Fiscal Quarter Ended April 2, 2011	Fiscal Quarter Ended April 3, 2010

Canadian Dollar - U.S. Dollar forward contracts $ (0.6 )  $ (0.1 )  Cost of sales $ (0.2 )  $ (0.1 ) 

Effect of Derivatives on the Statement of Operations - Derivatives Not Designated as Hedging Instruments

(In millions)	Location of Pretax Gain (Loss) Recognized in Income	Amount of Pretax Gain (Loss) Recognized in Income
Derivate type			Fiscal Quarter Ended April 2, 2011			Fiscal Quarter Ended April 3, 2010
Interest rate swap contracts	Interest expense	$	(0.1	)	$	-

STATEMENT OF CASH FLOWS

Fiscal Quarter Ended		April 2, 2011			April 3, 2010
(In millions)
Supplemental disclosures of cash flow information:
Cash paid (received) during the period for:
Interest	$	6.6		$	2.3
Net income tax (refunds) payments		(14.5	)		0.2
Supplemental disclosures of non-cash investing and financing activities:
Restricted stock issued to employees		26.0			27.5
Acquisition consideration payable recorded for acquisition of Moda		-			18.8

EQUITY METHOD INVESTMENTS

        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. On June 24, 2009, we increased our equity interest to 25% for an additional $15.2 million. The selling shareholders of GRI are entitled to receive an additional cash payment equaling 60% of the amount of GRI's fiscal year 2011 net income that exceeds a certain threshold. GRI 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 women's apparel, shoes and accessory brands. See "Accounts Receivable" for additional information regarding GRI.

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PENSION PLANS

Components of Net Periodic Benefit Cost

(In millions)	Fiscal Quarter Ended
		April 2, 2011			April 3, 2010
Interest cost	$	0.7		$	0.7
Expected return on plan assets		(0.7	)		(0.6	)
Amortization of net loss		0.4			0.4
Net periodic benefit cost	$	0.4		$	0.5

Employer Contributions

        During the fiscal quarter ended April 2, 2011, we contributed $0.5 million to our defined benefit pension plans. We anticipate contributing a total of $4.8 million during 2011.

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 e-commerce web sites, and income and expenses related to trademarks, licenses and general corporate functions are reported under "licensing, other and eliminations." We define segment income 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 ended April 2, 2011 and April 3, 2010. We are an integrated enterprise, characterized by substantial intersegment cooperation, cost allocations, and sharing of assets. Therefore, we do not represent that these segments, if operated independently, would report the operating profit and other financial information shown below.

(In millions)			Wholesale Better Apparel		Wholesale Jeanswear		Wholesale Footwear & Accessories		Retail			Licensing, Other & Eliminations			Consolidated
For the fiscal quarter ended April 2, 2011
	Revenues from  external customers	$	295.1	$	226.6	$	282.7	$	144.8		$	12.1		$	961.3
	Intersegment revenues		34.2		1.5		16.2		-			(51.9	)		-
	Total revenues		329.3		228.1		298.9		144.8			(39.8	)		961.3
	Segment income (loss)	$	43.9	$	26.8	$	29.0	$	(24.6	)	$	(13.9	)		61.2
	Net interest expense														(21.1	)
	Equity in income of unconsolidated affiliate														1.3
	Income before provision for income taxes													$	41.4
For the fiscal quarter ended April 3, 2010
	Revenues from  external customers	$	284.3	$	219.8	$	230.3	$	141.9		$	11.0		$	887.3
	Intersegment revenues		35.5		1.2		12.1		-			(48.8	)		-
	Total revenues		319.8		221.0		242.4		141.9			(37.8	)		887.3
	Segment income (loss)	$	57.2	$	36.9	$	24.2	$	(22.7	)	$	(19.3	)		76.3
	Net interest expense														(12.0	)
	Equity in loss of unconsolidated affiliate														(1.8	)
	Income before provision for income taxes													$	62.5

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SUPPLEMENTAL CONDENSED 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 The Jones Group Inc. ("Jones"), including Jones Apparel Group, USA, Inc. ("Jones USA"), Jones Apparel Group Holdings, Inc. ("Jones Holdings") and JAG Footwear, Accessories and Retail Corporation ("JAG Footwear").

        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, JAG Footwear, 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 or JAG Footwear to Jones.

Condensed Consolidating Balance Sheets
(In millions)

		April 2, 2011											December 31, 2010
			Issuers			Others		Elim- inations			Cons- olidated			Issuers			Others		Elim- inations			Cons- olidated
ASSETS
CURRENT ASSETS:
	Cash and cash equivalents	$	280.6		$	25.9	$	-		$	306.5		$	163.0		$	37.8	$	-		$	200.8
	Accounts receivable		293.9			212.5		-			506.4			210.2			135.4		-			345.6
	Inventories		289.9			162.6		0.1			452.6			289.4			176.5		-			465.9
	Prepaid and refundable income taxes		9.7			0.2		(9.4	)		0.5			3.3			0.1		15.3			18.7
	Deferred taxes		20.5			10.8		-			31.3			15.1			12.9		-			28.0
	Prepaid expenses and other current assets		25.1			13.9		-			39.0			22.1			10.0		-			32.1
	TOTAL CURRENT ASSETS		919.7			425.9		(9.3	)		1,336.3			703.1			372.7		15.3			1,091.1
Property, plant and equipment - net			81.1			163.9		-			245.0			75.1			151.3		-			226.4
Due from affiliates			-			1,485.1		(1,485.1	)		-			-			1,512.4		(1,512.4	)		-
Goodwill			46.7			115.1		-			161.8			46.7			115.1		-			161.8
Other intangibles - net			7.5			717.5		-			725.0			7.7			719.0		-			726.7
Deferred taxes			78.6			0.2		(78.8	)		-			84.2			-		(84.2	)		-
Investments in and loans to affiliates			2,717.4			42.6		(2,717.4	)		42.6			2,677.5			40.2		(2,677.5	)		40.2
Other assets			76.0			18.8		-			94.8			68.7			17.5		-			86.2
	TOTAL ASSETS	$	3,927.0		$	2,969.1	$	(4,290.6	)	$	2,605.5		$	3,663.0		$	2,928.2	$	(4,258.8	)	$	2,332.4
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
	Current portion of long-term debt and capital lease obligations	$	-		$	1.9	$	-		$	1.9		$	-		$	1.8	$	-		$	1.8
	Current portion of acquisition consideration payable		21.9			-		-			21.9			14.1			-		-			14.1
	Accounts payable		111.4			65.7		-			177.1			145.9			67.5		-			213.4
	Income taxes payable		19.8			9.5		(29.1	)		0.2			-			4.4		(4.4	)		-
	Accrued expenses and other current liabilities		74.3			50.0		-			124.3			85.5			56.9		-			142.4
	TOTAL CURRENT LIABILITIES		227.4			127.1		(29.1	)		325.4			245.5			130.6		(4.4	)		371.7
NONCURRENT LIABILITIES:
	Long-term debt		809.4			0.2		-			809.6			509.7			0.2		-			509.9
	Obligations under capital leases		-			24.7		-			24.7			-			25.2		-			25.2
	Deferred taxes		-			80.3		(66.3	)		14.0			-			72.1		(71.8	)		0.3
	Income taxes payable		6.4			-		-			6.4			6.3			-		-			6.3
	Acquisition consideration payable		192.1			1.4		-			193.5			199.9			1.4		-			201.3
	Due to affiliates		1,485.1			-		(1,485.1	)		-			1,512.4			-		(1,512.4	)		-
	Other		51.6			19.4		-			71.0			57.0			22.4		-			79.4
	TOTAL NONCURRENT LIABILITIES		2,544.6			126.0		(1,551.4	)		1,119.2			2,285.3			121.3		(1,584.2	)		822.4
	TOTAL LIABILITIES		2,772.0			253.1		(1,580.5	)		1,444.6			2,530.8			251.9		(1,588.6	)		1,194.1
EQUITY:
	Common stock and additional paid-in capital		546.1			2,078.9		(2,078.9	)		546.1			542.8			2,096.2		(2,096.2	)		542.8
	Retained earnings		614.3			628.3		(622.6	)		620.0			597.8			574.9		(568.9	)		603.8
	Accumulated other comprehensive (loss) income		(5.4	)		8.6		(8.6	)		(5.4	)		(8.4	)		5.1		(5.1	)		(8.4	)
	Total Jones stockholders' equity		1,155.0			2,715.8		(2,710.1	)		1,160.7			1,132.2			2,676.2		(2,670.2	)		1,138.2
	Noncontrolling interest		-			0.2		-			0.2			-			0.1		-			0.1
	TOTAL EQUITY		1,155.0			2,716.0		(2,710.1	)		1,160.9			1,132.2			2,676.3		(2,670.2	)		1,138.3
	TOTAL LIABILITIES AND EQUITY	$	3,927.0		$	2,969.1	$	(4,290.6	)	$	2,605.5		$	3,663.0		$	2,928.2	$	(4,258.8	)	$	2,332.4

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Condensed Consolidating Statements of Operations
(In millions)

	Fiscal Quarter Ended April 2, 2011											Fiscal Quarter Ended April 3, 2010
		Issuers			Others			Elim- inations			Cons- olidated		Issuers			Others			Elim- inations			Cons- olidated
Net sales	$	617.6		$	336.2		$	(4.8	)	$	949.0	$	625.9		$	253.8		$	(3.6	)	$	876.1
Licensing income		-			12.1			-			12.1		-			11.0			-			11.0
Other revenues		0.2			-			-			0.2		0.2			-			-			0.2
Total revenues		617.8			348.3			(4.8	)		961.3		626.1			264.8			(3.6	)		887.3
Cost of goods sold		408.2			223.9			(1.5	)		630.6		391.2			170.8			(0.9	)		561.1
Gross profit		209.6			124.4			(3.3	)		330.7		234.9			94.0			(2.7	)		326.2
Selling, general and administrative expenses		220.7			52.1			(3.3	)		269.5		224.0			28.4			(2.5	)		249.9
Operating (loss) income		(11.1	)		72.3			-			61.2		10.9			65.6			(0.2	)		76.3
Net interest expense (income) and financing costs		22.6			(1.5	)		-			21.1		13.4			(1.4	)		-			12.0
Equity in income (loss) of unconsolidated affiliate		-			1.3			-			1.3		-			(1.8	)		-			(1.8	)
(Loss) income before (benefit) provision for income taxes and equity in earnings of subsidiaries		(33.7	)		75.1			-			41.4		(2.5	)		65.2			(0.2	)		62.5
(Benefit) provision for income taxes		(5.9	)		21.4			-			15.5		2.5			20.6			-			23.1
Equity in earnings of subsidiaries		53.5			-			(53.5	)		-		44.5			-			(44.5	)		-
Net income		25.7			53.7			(53.5	)		25.9		39.5			44.6			(44.7	)		39.4
Less: income attributable to noncontrolling interest		-			0.2			-			0.2		-			0.2			-			0.2
Income attributable to Jones	$	25.7		$	53.5		$	(53.5	)	$	25.7	$	39.5		$	44.4		$	(44.7	)	$	39.2

Condensed Consolidating Statements of Cash Flows
(In millions)

		Fiscal Quarter Ended April 2, 2011												Fiscal Quarter Ended April 3, 2010
			Issuers			Others			Elim- inations			Cons- olidated			Issuers			Others			Elim- inations		Cons- olidated
Net cash (used in) provided by operating activities		$	(145.0	)	$	18.8		$	(10.6	)	$	(136.8	)	$	(90.4	)	$	4.2		$	-	$	(86.2	)
Cash flows from investing activities:
	Capital expenditures		(18.2	)		(14.7	)		-			(32.9	)		(3.9	)		(4.8	)		-		(8.7	)
	Acquisition of Moda Nicola International, LLC		-			-			-			-			(11.5	)		-			-		(11.5	)
	Net cash used in investing activities		(18.2	)		(14.7	)		-			(32.9	)		(15.4	)		(4.8	)		-		(20.2	)
Cash flows from financing activities:
	Issuance of 6.875% Senior Notes due 2019		300.0			-			-			300.0			-			-			-		-
	Debt issuance costs		(6.4	)		-			-			(6.4	)		-			-			-		-
	Dividends paid		(4.3	)		(10.6	)		10.6			(4.3	)		(4.3	)		-			-		(4.3	)
	Acquisition of treasury stock		(10.0	)		-			-			(10.0	)		-			-			-		-
	Payments of acquisition consideration payable		-			(4.2	)		-			(4.2	)		-			-			-		-
	Other items, net		1.5			(0.5	)		-			1.0			-			(0.8	)		-		(0.8	)
	Net cash provided by (used in) financing activities		280.8			(15.3	)		10.6			276.1			(4.3	)		(0.8	)		-		(5.1	)
Effect of exchange rates on cash			-			(0.7	)		-			(0.7	)		-			0.3			-		0.3
Net increase (decrease) in cash and cash equivalents			117.6			(11.9	)		-			105.7			(110.1	)		(1.1	)		-		(111.2	)
Cash and cash equivalents, beginning			163.0			37.8			-			200.8			322.1			11.3			-		333.4
Cash and cash equivalents, ending		$	280.6		$	25.9		$	-		$	306.5		$	212.0		$	10.2		$	-	$	222.2

NEW ACCOUNTING STANDARDS

        In April 2011, FASB issued ASU 2011-02, "Receivables (Topic 310): A Creditor's Determination of Whether a Restructuring Is a Troubled Debt Restructuring." ASU 2011-02 provides amendments to Topic 310 to clarify which loan modifications constitute troubled debt restructurings. It is intended to assist creditors in determining whether a modification of the terms of a receivable meets the criteria to be considered a troubled debt restructuring, both for purposes of recording an impairment loss and for disclosure of troubled debt restructurings. For public companies, the new guidance is effective for interim and annual periods beginning on or after June 15, 2011, and applies retrospectively to restructurings occurring on or after the beginning of the fiscal year of adoption. Early adoption is permitted. The adoption of ASU No. 2011-02 will not have an impact on our results of operations or our financial position.

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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 week periods ended April 2, 2011 (hereinafter referred to as the "first fiscal quarter of 2011") and April 3, 2010 (hereinafter referred to as the "first fiscal quarter of 2010") and our liquidity and capital resources. The following discussion and analysis should be read in conjunction with our Consolidated Financial Statements included elsewhere herein.

Executive 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, women's footwear and accessories and men's jeanswear. 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 and several e-commerce web sites. 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.

        During 2011 to date, the following significant events took place:

• on February 1, 2011, we announced the launch of "Shoelaborations^TM," a creative platform that seeks talented individuals doing original work in their unique artistic areas and allows them the opportunity to collaborate on a rotating basis with Nine West;
• on March 7, 2011, we announced that we successfully issued $300 million of 6.875% Senior Notes due 2019; and
• on April 28, 2011, we announced an amendment and extension of our existing $650 million senior credit facility to provide for additional international subfacilities and a decrease in fees and interest rates to current market rates and to extend the maturity date to April 28, 2016.

Retail store closings

        We continue to review our retail operations for underperforming locations. As a result of this review, we have decided to close retail locations that no longer provide strategic benefits. During 2009 and 2010, we closed 99 and 191 locations, respectively, we closed 27 locations during the first fiscal quarter of 2011, and we anticipate closing additional locations in 2011. We accrued $0.1 million and $0.6 million of termination benefits and associated employee costs during the first fiscal quarters of 2010 and 2011, respectively. In connection with our decision to close these stores, we reviewed the associated long-term assets for impairments. As a result of this review, we recorded $0.7 million and $1.2 million of impairment losses during the first fiscal quarters of 2010 and 2011, respectively, on leasehold improvements and furniture and fixtures located in the stores to be closed. These costs are reported as selling, general and administrative ("SG&A") expenses in the retail segment.

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 goodwill, intangible assets with indefinite lives and acquisition consideration liabilities. Estimates related to accounts receivable and inventory affect our wholesale better apparel, wholesale jeanswear, wholesale footwear and accessories and retail segments. Estimates related to goodwill affect our wholesale better apparel and wholesale footwear and accessories segments. Estimates related to intangible assets with indefinite lives affect our licensing, other and eliminations segment.

- 23 -

        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 indefinite-lived 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 trademark 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.

        Acquisition consideration liabilities are recorded as a result of acquisitions, where a portion of the purchase price is payable at the end of a specific future period, with the amount of payment based on the financial results of the acquired business during that period. The fair values of acquisition consideration liabilities are based on probability-weighted projections of the financial results of the acquired business and a discount factor based on our weighted average cost of capital. Changes in our assumptions could materially impact our fair value estimates, and material gains and losses could result where the estimated fair value of these liabilities differ from their carrying amounts.

Results of Operations

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

(In millions)	Fiscal Quarter Ended
	April 2, 2011				April 3, 2010
Net sales	$	949.0	98.7	%	$	876.1		98.7	%
Licensing income		12.1	1.3			11.0		1.2
Other revenues		0.2	0.0			0.2		0.0
Total revenues		961.3	100.0			887.3		100.0
Cost of goods sold		630.6	65.6			561.1		63.2
Gross profit		330.7	34.4			326.2		36.8
Selling, general and administrative expenses		269.5	28.0			249.9		28.2
Operating income		61.2	6.4			76.3		8.6
Net interest expense and financing costs		21.1	2.2			12.0		1.4
Equity in income (loss) of unconsolidated affiliate		1.3	0.1			(1.8	)	(0.2	)
Income before provision for income taxes		41.4	4.3			62.5		7.0
Provision for income taxes		15.5	1.6			23.1		2.6
Net income		25.9	2.7			39.4		4.4
Less: income attributable to noncontrolling interest		0.2	0.0			0.2		0.0
Income attributable to Jones	$	25.7	2.7	%	$	39.2		4.4	%

Percentage totals may not add due to rounding.

- 24 -

Fiscal Quarter Ended April 2, 2011 Compared with Fiscal Quarter Ended April 3, 2010

        Revenues. Total revenues for the first fiscal quarter of 2011 were $961.3 million, compared with $887.3 million for the first fiscal quarter of 2010, an increase of 8.3%. Revenues by segment were as follows:

(In millions)		First Fiscal Quarter of 2011		First Fiscal Quarter of 2010		Increase	Percent Change
Wholesale better apparel	$	295.1	$	284.3	$	10.8	3.8	%
Wholesale jeanswear		226.6		219.8		6.8	3.1
Wholesale footwear and accessories		282.7		230.3		52.4	22.8
Retail		144.8		141.9		2.9	2.0
Licensing and other		12.1		11.0		1.1	10.0
Total revenues	$	961.3	$	887.3	$	74.0	8.3	%

        Wholesale better apparel revenues increased $10.8 million, primarily due to sales of the Jessica Simpson product lines launched in Fall 2010 and increased shipments of our Jones Studio Separates and Nine West dress and suit products due to product performance at retail. The increase in revenues also included a $0.6 million favorable effect of changes in exchange rates between the U.S. and Canadian Dollars.

        Wholesale jeanswear revenues increased $6.8 million, primarily due to increased shipments of our private label products due to the timing of certain private label programs and increased shipments of our Gloria Vanderbilt and Bandolino product lines due to product performance at retail. These increases were partially offset by reduced shipments of our Energie product line due to the performance of the product at retail and product assortment issues.

        Wholesale footwear and accessories revenues increased $52.4 million, primarily due to $47.9 million in sales of the acquired Stuart Weitzman product line, an increase in shipments of our AK Anne Klein product line due to product performance at retail and an increase in our international business due to improved global economic conditions and product performance. These increases were partially offset by decreased shipments of our Easy Spirit and Bandolino product lines due to product performance at retail and decreased shipments of our licensed Dockers^(R) products due to a major customer discontinuing the product line.

        Retail revenues increased $2.9 million. Revenue increases of $14.2 million related to the acquired Stuart Weitzman stores and a 1.5% increase in comparable store sales ($1.8 million) resulting from product performance were partially offset by a net $13.1 million reduction in revenues primarily related to our program to close underperforming locations. We operated approximately 168 (on average, net of openings) fewer stores in the current period than in the prior period. We began 2011 with 803 retail locations and had a net decrease of 38 locations to end the period with 765 locations, compared with 877 locations at the end of the prior period. Our comparable e-commerce business sales increased 24.7% ($3.3 million), our comparable footwear store sales decreased 2.8% ($2.0 million) and our comparable apparel store sales increased 1.4% ($0.5 million). Comparable stores are locations (including e-commerce sites) that have been open for a full year, are not scheduled to close in the current period and are not scheduled for an expansion or downsize by more than 25% or relocation to a different street or mall. The increase in revenues also included a $0.4 million favorable effect of changes in exchange rates between the U.S. and Canadian Dollars.

        Licensing and other revenues increased $1.1 million, primarily due to increased sales volume of our licensees and $0.1 million of SWH licensing revenues.

        Gross Profit. The gross profit margins were 34.4% and 36.8% for the first fiscal quarters of 2011 and 2010, respectively.

- 25 -

        Wholesale better apparel gross profit margins were 35.9% and 38.2% for the first fiscal quarters of 2011 and 2010, respectively. The decrease was largely due to higher raw material and labor costs.

        Wholesale jeanswear gross profit margins were 25.2% and 30.5% for the first fiscal quarters of 2011 and 2010, respectively. The decrease was primarily due to higher raw material and labor costs and price compression in our l.e.i. and private label businesses and higher levels of markdown assistance in our sportswear product lines.

        Wholesale footwear and accessories gross profit margins were 29.0% and 28.1% for the first fiscal quarters of 2011 and 2010, respectively. The increase was primarily due to the addition of the higher-margin Stuart Weitzman product line and better performance of our jewelry products at retail, partially offset by higher levels of markdown assistance and higher production costs.

        Retail gross profit margins were 48.2% and 50.2% for the first fiscal quarters of 2011 and 2010, respectively. The decrease was primarily due to increased promotional activity to clear slow-moving inventory and higher production costs, partially offset by the addition of higher-margin Stuart Weitzman locations.

        Selling, General and Administrative Expenses. SG&A expenses were $269.5 million in the first fiscal quarter of 2011 and $249.9 million in the first fiscal quarter of 2010. The acquisition of Stuart Weitzman Holdings, LLC ("SWH") added $19.0 million in SG&A expenses to the first fiscal quarter of 2011.

        Wholesale better apparel SG&A expenses increased $9.3 million, primarily due to a $2.8 million increase in advertising and marketing costs (partially due to the timing of certain print media campaigns), a $2.0 million increase in costs related to the Jessica Simpson product lines launched in Fall 2010, a $1.1 million increase in salaries and benefits, a $1.1 million increase in severance costs related to our Canadian operations, $1.1 million in costs for our new Spanish wholesale operation, a $0.7 million increase in distribution costs, a $0.3 million effect of unfavorable changes in exchange rates between the U.S. and Canadian Dollars and $0.2 million of other net cost increases.

        Wholesale jeanswear SG&A expenses increased $0.2 million, primarily due to a $1.2 million increase in salaries and benefits, partially offset by a $0.6 million reduction in advertising costs and $0.4 million of net cost reductions.

        Wholesale footwear and accessories SG&A expenses increased $13.6 million, primarily due to $9.4 million of expenses added as a result of the acquisition of SWH, a $1.5 million increase in severance-related costs, a $1.0 million increase in administrative costs, a $0.9 million increase in advertising costs and $0.8 million of other net cost increases in the current period.

        Retail SG&A expenses increased $0.5 million, primarily due to $9.5 million related to the stores acquired in the SWH acquisition, a $1.1 million increase in distribution costs and $0.5 million of other net cost increases, offset by a $4.8 million reduction in salaries and benefits, a $4.3 million reduction in occupancy costs and a $1.5 million reduction in depreciation expense as a result of operating fewer stores in the current period.

        SG&A expenses for the licensing, other and eliminations segment decreased $4.0 million, primarily due to a $1.6 million reduction in professional fees (including $0.6 million in the prior period related to the acquisition of Moda Nicola International, LLC), a $1.0 million decrease in amortization of equity-based compensation, a $0.6 million reduction in salary and benefit costs, a $0.4 million reduction in board of director fees and $0.4 million of other net cost reductions.

        Operating Income. The resulting operating income for the first fiscal quarter of 2011 was $61.2 million, compared with $76.3 million for the first fiscal quarter of 2010, due to the factors described above.

        Net Interest Expense. Net interest expense increased $9.1 million, primarily due to $8.9 million of interest recorded on the SWH acquisition consideration liability and a $0.2 million reduction in interest income. A $1.9 million reduction of interest and financing costs from our amended revolving secured

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credit facility was offset by a $1.5 million increase in interest expense resulting from the issuance of our 6.875% Senior Notes on March 7, 2011 and a net $0.4 million increase in interest expense from our interest rate swaps and cap.

        Income Taxes. The effective income tax rate was 37.5% and 37.0% for the first fiscal quarters of 2011 and 2010, respectively. The increase is primarily due to the impact of the foreign income tax differential in the first fiscal quarter of 2011 compared with the first fiscal quarter of 2010.

        Net Income and Earnings Per Share. Net income was $25.9 million in the first fiscal quarter of 2011, compared with $39.4 million in the first fiscal quarter of 2010. Diluted earnings per share for the first fiscal quarter of 2011 was $0.30, compared with $0.45 for the first fiscal quarter of 2010, with 1.2% more diluted 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. We currently fund our operations primarily through cash generated by operating activities, and rely on our revolving credit facility for the issuance of trade letters of credit for the purchases of inventory and for cash borrowings as needed. As of April 2, 2011, total cash and cash equivalents were $306.5 million, an increase of $105.7 million from the $200.8 million reported as of December 31, 2010.

        Cash flows from operating activities used $136.8 million and $86.2 million in the first fiscal quarters of 2011 and 2010, respectively. The change from the prior period was primarily due to changes in working capital. Accounts receivable increased more in the current period due to higher revenues and the timing of shipments and collections compared with the prior period. Inventory experienced less seasonal decreases in the current period primarily due to the timing of receipts. Accounts payable decreased more in the current period primarily due to the timing of inventory payments.

        Cash flows from investing activities used $32.9 million and $20.2 million in the first fiscal quarters of 2011 and 2010, respectively, for the purchases of property and equipment in both periods and the acquisition of Moda in 2010.

        Cash flows from financing activities provided $276.1 million in the first fiscal quarter of 2011, primarily as the result of the issuance of $300.0 million of 6.875% Senior Notes due 2019. Uses of cash during this period were primarily for the repurchase of our common stock, the payment of dividends and payments related to the acquisition consideration payable from the SWH acquisition.

        In March 2011, we issued $300.0 million of 6.875% Senior Notes due 2019. Net proceeds were $293.3 million, of which $45.0 million was used to repay amounts then outstanding under our secured revolving credit agreement.

        Cash flows from financing activities used $5.1 million in the first fiscal quarter of 2010, primarily for the payment of dividends and principal payments on capitalized leases.

        We repurchased $10.0 million of our common stock on the open market during the first fiscal quarter of 2011 and no common stock during the first fiscal quarter of 2010. As of April 2, 2011, $283.4 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.

        We have a secured revolving credit agreement expiring on May 13, 2015 (the "Credit Facility") with several lending institutions to borrow an aggregate principal amount of up to $650 million. Up to the entire amount of the facility is available for cash borrowings, with up to $400 million available for trade letters of credit, up to $50 million available for standby letters of credit, and a subfacility available to our Canadian subsidiaries of up to $25 million for letters of credit and borrowings. Borrowings under the

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Credit Facility may be used to refinance existing indebtedness and for general corporate purposes in the ordinary course of business. Such borrowings bear interest either based on the alternate base rate, as defined in the Credit Facility, or based on Eurocurrency rates, each with a margin that depends on the availability remaining under the Credit Facility. The Credit Facility contains customary events of default.

        Availability under the Credit Facility is determined with reference to a borrowing base consisting of a percentage of eligible inventory, accounts receivable, credit card receivables and licensee receivables, minus reserves determined by the joint collateral agents. At April 2, 2011, we had no cash borrowings and $21.4 million of letters of credit outstanding, and our remaining availability was $578.8 million. If availability under the Credit Facility falls below a stated level, we will be required to comply with a minimum fixed charge coverage ratio. The Credit Facility also contains affirmative and negative covenants that, among other things, will limit or restrict our ability to (1) incur indebtedness, (2) create liens, (3) merge, consolidate, liquidate or dissolve, (4) make investments (including acquisitions), loans or advances, (5) sell assets, (6) enter into sale and leaseback transactions, (7) enter into swap agreements, (8) make certain restricted payments (including dividends and other payments in respect of capital stock), (9) enter into transactions with affiliates, (10) enter into restrictive agreements, and (11) amend material documents. The Credit Facility is secured by a first priority lien on substantially all of our personal property.

        On April 28, 2011, we completed an amendment and restatement of our Credit Facility. The amended and restated terms and conditions provide for an extension of the maturity date from May 13, 2015 to April 28, 2016. The amendment and restatement also provides for, among other things, the following changes to the Credit Facility: (1) a split of the Credit Facility into a $350 million U.S. commitment which may be drawn by the U.S. borrowers as revolving loans or letters of credit in U.S. dollars, and a $300 million international commitment which may be drawn by the U.S. borrowers or by any Canadian or European borrowers as revolving loans or letters of credit in euros, sterling, Canadian dollars, or U.S. dollars; (2) reductions in the interest rate spreads and commitment fees payable under the Credit Facility; (3) the addition of separate borrowing bases in each relevant European country, similar to the U.S. borrowing base (with variations in accordance with local law or practice); (4) changes in the U.S. borrowing base eligibility criteria for inventory in or in transit to Canada; (5) an increase in the cap on swingline loans; (6) reductions in the various availability levels below which (x) dominion periods are triggered, and (y) the borrowers must comply with certain financial and other covenants; (7) increases in various debt baskets, including a lifting of limits on the general unsecured debt basket and on unsecured and secured debt incurred by non-U.S. subsidiaries that are not loan parties, and the addition of a new lien basket for financings secured by intellectual property; (8) increases in various investments baskets and the addition of a new investments basket; (9) an increase in the general asset sales basket; and (10) reductions in the various thresholds to be met before we can make restricted payments or can prepay our bonds maturing in 2014.

        SWH has a $1.5 million unsecured borrowing facility with a lending institution that expires on October 1, 2011 and is renewable on an annual basis, under which no cash borrowings and $1.1 million in letters of credit were outstanding at April 2, 2011. Cash borrowings under this facility bear interest based on either the prevailing prime rate or the prevailing LIBOR rate plus 300 basis points. SWH also has a €0.3 million variable-rate unsecured borrowing facility with a European lending institution that expires in March 2012 and is renewable on an annual basis, under which no amounts were outstanding at April 2, 2011.

        On April 27, 2011, we announced that our Board of Directors had declared a quarterly cash dividend of $0.05 per share to all common stockholders of record as of May 13, 2011 for payment on May 27, 2011.

Economic Outlook
        The recent economic and political environments have resulted in fluctuating consumer confidence along with rising energy and gasoline prices that are reducing consumers' discretionary income. This may lead to reduced consumer spending from recent experience, which could affect our net sales and our future profitability. Reduced consumer spending, combined with rising costs related to changes in foreign exchange rates, increasing labor costs (primarily in Asia) and commodity prices and increasing transportation costs may reduce our gross profit margins from present levels. We may be limited in our

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ability to increase our selling prices to offset rising costs. Should the consumer not accept higher retail prices for our products, these rising costs could have a material adverse effect on our business.

        Our products are manufactured in many foreign countries, including China and Spain. Due to the current and expected future economic relationship between the United States and China, we may experience increased risk related to changes in foreign currency exchange rates should China allow the Yuan to rise in value against the Dollar. We may also experience increased risk related to changes in foreign currency rates between the Euro and the Dollar due to economic conditions in Europe. Should either of these occur, increased production costs for our goods manufactured in China and Spain could result.

        When adverse economic conditions exist in the United States or abroad, we may experience increased risk related to the collectibility of our accounts receivable, and we may increase our provision for doubtful accounts in the future should any 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 on our financial condition, results of operations and/or liquidity.

        The economic turmoil in the credit markets over the past several years and the negative effects of the economic environment on our business may negatively impact our ability to borrow funds in the future. However, we believe that available cash and cash equivalents, funds generated by operations and the Credit Facility will 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 acquisition liabilities and commitments. Although there can be no assurances, we believe that the participating banks will be willing and able to loan funds to us in accordance with their legal obligations under the Credit Facility.

New Accounting Standards

        In April 2011, FASB issued ASU 2011-02, "Receivables (Topic 310): A Creditor's Determination of Whether a Restructuring Is a Troubled Debt Restructuring." ASU 2011-02 provides amendments to Topic 310 to clarify which loan modifications constitute troubled debt restructurings. It is intended to assist creditors in determining whether a modification of the terms of a receivable meets the criteria to be considered a troubled debt restructuring, both for purposes of recording an impairment loss and for disclosure of troubled debt restructurings. For public companies, the new guidance is effective for interim and annual periods beginning on or after June 15, 2011, and applies retrospectively to restructurings occurring on or after the beginning of the fiscal year of adoption. Early adoption is permitted. The adoption of ASU No. 2011-02 will not have an impact on our results of operations or our financial position.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market Risk Sensitive Instruments

        We are exposed to the impact of interest rate changes, foreign currency fluctuations, and changes in the market value of our fixed rate long-term debt. 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 following quantitative disclosures were derived using quoted market prices, yields and theoretical pricing models obtained through independent pricing sources for the same or similar types of financial instruments, taking into consideration the underlying terms, such as the coupon rate, term to maturity and imbedded call options. Certain items such as lease contracts, insurance contracts, and obligations for pension and other post-retirement benefits were not included in the analysis. For further information see "Derivatives" and "Financial Instruments" in the Notes to Consolidated Financial Statements.

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Interest Rates

        Our primary interest rate exposures relate to the fair value of our fixed rate long-term debt and interest expense related to our revolving credit facility.

        At April 2, 2011, the fair value of our fixed rate debt was $750.2 million. On that date, the potential decrease in fair value of our fixed rate long-term debt instruments resulting from a hypothetical 10% adverse change in interest rates was approximately $68.2 million.

        Our primary interest rate exposures on variable rate credit facilities are with respect to United States and Canadian short-term rates. Cash borrowings under these facilities bear interest at rates that vary with changes in prevailing market rates. At April 2, 2011, we had $651.9 million in variable rate credit facilities, under which no cash borrowings and $22.5 million of letters of credit were outstanding.

        At April 2, 2011, we had outstanding interest rate swaps to convert our $250 million 5.125% Senior Notes due 2014 (the "2014 Notes") and $150 million of our $300 million 6.875% Senior Notes due 2019 (the "2019 Notes") to variable-rate debt and an interest rate cap to limit our exposure to increases in the variable rates of our interest rate swaps on the 2014 Notes.

        Under the terms of the swap contracts related to the 2014 Notes, we are required to make semiannual variable-rate payments to the counterparties calculated based on three-month LIBOR rates (which are reset on the 15th day of each calendar quarter) plus 3.46%, and the counterparties are obligated to make semiannual fixed-rate payments to us of 5.125%. We also entered into an interest rate cap, at a cost of $2.7 million, which limits our three-month LIBOR rate exposure to 5.0%. These swap and cap transactions have a termination date of November 15, 2014, the date the 2014 Notes mature.

        Under the terms of the swap contracts related to the 2019 Notes, we are required to make semiannual variable-rate payments to the counterparties calculated based on three-month LIBOR rates (which are reset on the 15th day of each calendar quarter) plus 3.73%, and the counterparties are obligated to make semiannual fixed-rate payments to us of 6.875%. These swap transactions have a termination date of March 15, 2019, the date the 2019 Notes mature.

        At April 2, 2011, the fair value of the interest rate swaps was a liability of $2.4 million and the fair value of the interest rate cap was an asset of $1.2 million.

Foreign Currency Exchange Rates

        We are exposed to market risk related to changes in foreign currency exchange rates. Our products have historically been purchased from foreign manufacturers in pre-set United States dollar prices. With the acquisition of SWH, we also purchase certain products in Euros. We also have assets, liabilities and intercompany accounts denominated in certain foreign currencies that generate exchange gains and losses as exchange rates change. To date, we generally have not been materially adversely affected by fluctuations in exchange rates.

        At April 2, 2011, we had outstanding foreign exchange contracts to exchange Canadian Dollars for a total notional value of US $15.9 million at a weighted-average exchange rate of $1.02 maturing through November 2011. The fair value of these contracts at April 2, 2011 was a $0.8 million unrealized loss. 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 should offset losses and gains on the assets, liabilities, and transactions being hedged. 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 counterparty, which presently has a high credit rating, to fail to meet its obligations.

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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 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 Chief Executive Officer and our Chief Financial Officer concluded that both our disclosure controls and procedures and our internal controls and procedures are designed to provide and are effective in providing reasonable assurance 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 The Jones Group Inc. and our consolidated subsidiaries during the fourth quarter of 2006. During the first fiscal quarter of 2011, 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.

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, regional and international 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 capital on satisfactory terms;
• given the uncertain economic environment, the possible unwillingness of committed lenders to meet their obligations to lend to borrowers, in general;
• 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;

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• our ability to identify acquisition candidates and, in a competitive environment for such acquisitions, acquire such businesses on reasonable financial and other terms;
• the integration of the organizations and operations of any acquired business into our existing organization and operations;
• 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, including political instability in countries where contractors and suppliers are located;
• 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;
• 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.

THE JONES GROUP INC.
(Registrant)

Date: April 28, 2011 By          /s/ Wesley R. Card
WESLEY R. CARD
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*	Amendment No. 2 dated March 28, 2011 to Buying Agency Agreement between JAG Footwear, Accessories and Retail Corporation (as successor in interest to Nine West Footwear Corporation) and Bentley HSTE Far East Services Limited.
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.
101.INS*	XBRL Instance Document.
101.SCH*	XBRL Taxonomy Extension Schema.
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase.
101.DEF*	XBRL Taxonomy Extension Definition Linkbase.
101.LAB*	XBRL Taxonomy Extension Label Linkbase.
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase.

____________
* Filed herewith.
^o Furnished herewith.

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EX-10

EXHIBIT 10.1

AMENDMENT NO. 2

            AMENDMENT NO. 2, dated as of March 28, 2011, between JAG Footwear, Accessories and Retail Corporation (as successor in interest to Nine West Footwear Corporation) (the "Principal"), and Bentley HSTE Far East Services Limited (the "Agent"). Certain capitalized terms used herein without other definition shall have the respective meanings given in the Agency Agreement (as defined below).

WITNESSETH:

            WHEREAS, the Principal and the Agent are party to a Buying Agency Agreement, dated as of August 31, 2001, as amended by Amendment No. 1 dated as of June 2, 2009 (as so amended, the "Original Agreement" and, as further amended by this Amendment No. 2 and as may from time to time be further amended, supplemented or otherwise modified, the "Agency Agreement"); and

            WHEREAS, subject to the terms and conditions set forth in this Amendment No. 2, the Principal and the Agent (collectively, the "Parties") have agreed to amend the Original Agreement to the extent provided herein;

            NOW THEREFORE, the Parties agree as follows:

        SECTION 1.   AMENDMENTS

            1.01   Related Parties. Section 1.4 of the Original Agreement is hereby amended by deleting such Section in its entirety and by substituting therefor the following:

        "1.4   Related Parties. Principal acknowledges Agent's relationship to the following entities (each a "Related Party" and, collectively, the "Related Parties"):

        Sunley Fashions SA
        Capital Joy Holdings Limited
        Shine Manor Sichuan
        Guang Zhou Chuang De Shoes Co Limited
        Chongqing Jin Tian Footwear Co Limited
        Dong Guan Leysun Shoes Co Ltd
        Stella Holdings Limited

but Agent represents that it will not share its commissions with, or solicit or accept remuneration from, any Related Party in connection with the subject transactions.

"Agent further represents that its relationships with any and all of the Related Parties shall not interfere with Agent's obligation to operate under the

specific direction and control, and in the best interests, of the Principal in all matters relating to this Agreement."

        SECTION 2.   MISCELLANEOUS

            2.01   Confirmation and Ratification of Terms, Etc. Except as expressly waived or modified herein, all terms, conditions, covenants and agreements contained in the Original Agreement remain unchanged and are hereby confirmed and ratified in all respects and shall continue in full force and effect.

            2.02   Successors and Assigns. This Amendment No. 2 shall be binding upon and inure to the benefit of both the Principal and the Agent and their respective successors and permitted assigns.

            2.03   References to Original Agreement. The Parties hereby confirm and agree that all references to "this Agreement" contained in the Original Agreement shall be references to the Original Agreement as amended by this Amendment No. 2, as the same may be further amended, modified or supplemented from time to time in the future.

            2.04   Counterparts. This Amendment No. 2 may be executed in any number of counterparts, and each such counterpart shall be deemed to be an original and all of such counterparts taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Amendment No. 2 by facsimile or other electronic transmission shall be as effective as delivery of a manually executed counterpart

            2.05   Headings. Headings have been inserted for convenience of reference only, are not intended to be considered a part of this Amendment No. 2 for the purpose of its interpretation and shall not modify or restrict any of the terms or provisions hereof.

            2.06   Entire Understanding. This Amendment No. 2 and the Original Agreement set forth the entire agreement between the Principal and the Agent with respect to matters relating to the agency created thereby and there are no understandings, representations, warranties or inducements except as set forth herein and in the Original Agreement.

            2.07   Modifications. This Amendment No. 2 may not be amended or cancelled or any of its terms waived except by a written instrument signed by Principal and Agent.

            2.08   Governing Law. This Amendment No. 2 shall be construed and enforced in accordance with, and be governed by, the laws of the State of New York, U.S.A. without giving effect to any conflict of law principles that would cause the application of the laws of any other jurisdiction.

2

            IN WITNESS WHEREOF the Parties have caused this Amendment No. 2 to be duly executed and delivered by their respective authorized officers as of the date first written above.

FOR AND ON BEHALF OF BENTLEY HSTE FAR EAST SERVICES LIMITED, as Agent

By:  /s/ Howard Gaskell
Name: VIS Direct Services Limited
Title:  Director By:  /s/ Mark Andrews
Name:  Visman Services Limited
Title: Director

JAG FOOTWEAR, ACCESSORIES AND RETAIL CORPORATION (as successor in interest to Nine West Footwear Corporation), as Principal

By: /s/ Thomas R. Murray
Name: Thomas R. Murray
Title: Chief Financial Officer

3

EX-31

EXHIBIT 31

CERTIFICATIONS

I, Wesley R. Card, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of The Jones 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: April 28, 2011
 

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

I, John T. McClain, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of The Jones 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: April 28, 2011
 

/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 The Jones Group Inc. on Form 10-Q for the fiscal quarter ended April 2, 2011 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 The Jones Group Inc.

By: /s/ Wesley R. Card

Name: Wesley R. Card
Title: Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to The Jones 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 The Jones Group Inc. on Form 10-Q for the fiscal quarter ended April 2, 2011 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 The Jones 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 The Jones Group Inc. and will be retained by The Jones Group Inc. and furnished to the Securities and Exchange Commission or its staff upon request.