J.Crew Group Q1'FY14 revenues climb 5% to $592mn

05 Jun '14

3 min read

J.Crew Group, Inc. announced financial results for the three months ended May 3, 2014.

First Quarter highlights:

Revenues increased 5% to $592.0 million, with comparable company sales decreasing 2%. Comparable company sales increased 5% in the first quarter last year. Store sales increased 2% to $386.4 million on top of an increase of 7% in the first quarter last year. Direct sales increased 12% to $197.0 million following an increase of 23% in the first quarter last year.

Gross margin was 38.7% compared to 44.7% in the first quarter last year. Selling, general and administrative expenses were $195.2 million, or 33.0% of revenues, compared to $178.4 million, or 31.6% of revenues in the first quarter last year. Operating income was $34.0 million, or 5.7% of revenues, compared to $73.6 million, or 13.1% of revenues, in the first quarter last year.

Net loss was $30.1 million compared with net income of $29.3 million in the first quarter last year. This year reflects a loss of $36 million, net of tax, incurred in connection with the refinancing of our term loan facility and the redemption of our senior notes.

Adjusted EBITDA decreased to $64.8 million from $101.0 million in the first quarter last year. An explanation of the manner in which we use adjusted EBITDA and an associated reconciliation to GAAP measures are included in Exhibit.

Balance Sheet highlights:

Cash and cash equivalents were $59 million compared to $92 million at the end of the first quarter last year, reflecting (i) costs of $29 million paid in connection with the refinancing of our senior secured term loan and the retirement of our senior notes and (ii) a dividend of $19 million discussed in the related party section below.

Total debt, net of discount, was $1,559 million, reflecting our new senior secured term loan, which matures in 2021. Total debt of $1,576 million in the first quarter last year consisted of (i) the former senior secured term loan of $1,176 million and (ii) senior unsecured notes of $400 million, which were refinanced and redeemed, respectively, in the first quarter.

Inventories were $396 million compared to $308 million at the end of the first quarter last year. Inventories and inventories per square foot increased 28% and 16%, respectively.

Refinancing

On March 5, 2014, we refinanced our term loan facility, the proceeds of which were used to (i) refinance amounts outstanding under the former term loan facility of $1,167 million and (ii) together with cash on hand, redeem in full the outstanding senior notes of $400 million, and to pay fees, call premiums and accrued interest. The maturity date of the new term loan facility is March 5, 2021. The refinancing is expected to result in an annual savings of $16 million in interest expense.

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J.Crew Group

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