J. Crew Q3 profits up; its about design, service & creativity

25 Nov '09

3 min read

J. Crew Group, Inc. announced financial results for the three months and nine months ended October 31, 2009.

Third Quarter highlights:

• Revenues increased 14% to $414.1 million. Store sales increased 20% to $300.1 million, with comparable store sales increasing 8%. Comparable store sales decreased 3% in the third quarter of fiscal 2008. Direct sales (Internet and Phone) rose by 4% to $105.5 million. Direct sales increased 13% to $101.8 million in the third quarter of fiscal 2008.
• Gross margin increased to 48.4% of revenues from 41.6% of revenues in the third quarter of fiscal 2008.
• Operating income increased to $75.2 million, or 18.2% of revenues, compared to $32.5 million, or 9.0% of revenues, in the third quarter of fiscal 2008.
• Net income was $43.9 million, or $0.67 per diluted share, compared to a net income of $19.0 million, or $0.30 per diluted share, in the third quarter of fiscal 2008.

Millard Drexler, J. Crew's Chairman and CEO stated: "We are very pleased with our third quarter results. Regardless of the economic environment our long term mission does not change - it's about product, it's about quality, it's about design, it's about service, it's about creativity. It might sound simple, but in this business sometimes the simplest things are the hardest to achieve."

First Nine Months highlights:

• Revenues increased 7% to $1,117.4 million. Store sales increased 11% to $799.9 million, with comparable store sales decreasing 0.4%. Comparable store sales decreased 0.4% in the first nine months of fiscal 2008. Direct sales rose by 1% to $289.0 million. Direct sales increased 14% to $285.9 million in the first nine months of fiscal 2008.
• Gross margin increased to 44.2% of revenues from 43.1% of revenues in the first nine months of fiscal 2008.
• Operating income increased 22% to $142.7 million, or 12.8% of revenues, compared to $117.1 million, or 11.3% of revenues, in the first nine months of fiscal 2008. Operating income in the first nine months of fiscal 2009 includes charges of approximately $5.3 million related to our workforce reduction, underperforming stores and lease termination actions.
• Net income was $82.9 million, or $1.29 per diluted share, compared to a net income of $67.7 million, or $1.06 per diluted share, in the first nine months of fiscal 2008.

Balance Sheet highlights as of October 31, 2009:

• Cash and cash equivalents were $246.8 million at the end of the third quarter compared to $114.5 million at the end of the third quarter of fiscal 2008.
• Inventories at the end of the quarter were $223.9 million, compared to $250.1 million at the end of the third quarter of fiscal 2008. Inventory per square foot at the end of the quarter decreased 17% compared to the end of the third quarter of fiscal 2008.

J. Crew Group, Inc. is a nationally recognized multi-channel retailer of women's, men's and children's apparel, shoes and accessories. As of November 24, 2009, the Company operates 243 retail stores, the J. Crew catalog business, jcrew.com, and 78 factory outlet stores.

J. Crew Group Inc

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