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Direct sales soar at J. Crew Group
06 Sep '11
5 min read
• Gross margin was 40.3% compared to 46.8% in the first six months of fiscal 2010. The decrease in gross margin was impacted by amortization of step-up in inventory value and the net impact of favorable/unfavorable store lease amortization which totaled $26.7 million that were recorded in connection with the acquisition.
• Selling general and administrative expenses increased to $351.6 million from $249.7 million in the first six months of fiscal 2010. The first six months of fiscal 2011 includes $95.5 million of incremental expenses as a result of purchase accounting and related transaction impact which includes: $32.2 million of transaction expenses, $44.7 million of acquisition related share-based compensation, $8.9 million increase in depreciation and amortization related to purchase accounting, and a reserve for litigation settlement and legal costs of $6.5 million.
• Operating loss was $11.7 million, or 1% of revenues, compared with operating income of $134.4 million, or 16.4% of revenues, in the first six months of fiscal 2010. Operating loss in the first six months of fiscal 2011 includes $122.2 million of incremental costs and amortization incurred with the acquisition and related to purchase accounting. Operating income in the first six months of fiscal 2010 included a benefit of $3.2 million in share-based compensation for recognition of forfeited share-based awards.
• Net loss was $40.5 million compared with net income of $79.6 million in the first six months of fiscal 2010. The first six months of fiscal 2011 was impacted by costs and amortization incurred with the acquisition and related to purchase accounting as noted above and increased interest expense as a result of debt incurred in connection with the acquisition.
• Adjusted EBITDA was $138.9 million compared to $158.4 million in the first six months of fiscal 2010.
Balance Sheet highlights as of July 30, 2011:
• Cash and cash equivalents were $88.3 million at the end of the second fiscal quarter compared to $340.5 million at the end of the second fiscal quarter in the prior year.
• Total debt was $1,597 million at the end of the second quarter, comprised of a $1,197 million seven-year senior secured term loan and $400 million in senior unsecured notes maturing in eight years, incurred in connection with the acquisition, compared to $49.2 million at the end of the second fiscal quarter in the prior year.
• Inventories at the end of the second fiscal quarter were $260.1 million (including $7.4 million of inventory step-up value recorded related to the transaction), compared to $219.5 million at the end of the second quarter of fiscal 2010. Inventory per square foot (excluding step-up value related to the transaction) increased 11% compared to the end of the second quarter of fiscal 2010.
• Selling general and administrative expenses increased to $351.6 million from $249.7 million in the first six months of fiscal 2010. The first six months of fiscal 2011 includes $95.5 million of incremental expenses as a result of purchase accounting and related transaction impact which includes: $32.2 million of transaction expenses, $44.7 million of acquisition related share-based compensation, $8.9 million increase in depreciation and amortization related to purchase accounting, and a reserve for litigation settlement and legal costs of $6.5 million.
• Operating loss was $11.7 million, or 1% of revenues, compared with operating income of $134.4 million, or 16.4% of revenues, in the first six months of fiscal 2010. Operating loss in the first six months of fiscal 2011 includes $122.2 million of incremental costs and amortization incurred with the acquisition and related to purchase accounting. Operating income in the first six months of fiscal 2010 included a benefit of $3.2 million in share-based compensation for recognition of forfeited share-based awards.
• Net loss was $40.5 million compared with net income of $79.6 million in the first six months of fiscal 2010. The first six months of fiscal 2011 was impacted by costs and amortization incurred with the acquisition and related to purchase accounting as noted above and increased interest expense as a result of debt incurred in connection with the acquisition.
• Adjusted EBITDA was $138.9 million compared to $158.4 million in the first six months of fiscal 2010.
Balance Sheet highlights as of July 30, 2011:
• Cash and cash equivalents were $88.3 million at the end of the second fiscal quarter compared to $340.5 million at the end of the second fiscal quarter in the prior year.
• Total debt was $1,597 million at the end of the second quarter, comprised of a $1,197 million seven-year senior secured term loan and $400 million in senior unsecured notes maturing in eight years, incurred in connection with the acquisition, compared to $49.2 million at the end of the second fiscal quarter in the prior year.
• Inventories at the end of the second fiscal quarter were $260.1 million (including $7.4 million of inventory step-up value recorded related to the transaction), compared to $219.5 million at the end of the second quarter of fiscal 2010. Inventory per square foot (excluding step-up value related to the transaction) increased 11% compared to the end of the second quarter of fiscal 2010.
J. Crew Group Inc
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