J Crew total revenue down 2% to $560.9 mn in Q2 FY17

27 Aug '17
4 min read
Courtesy: JCrew
Courtesy: JCrew

Total revenues of J Crew decreased 2 per cent to $560.9 million in the second quarter of fiscal 2017. Comparable company sales decreased 5 per cent following a decrease of 8 per cent in Q2 last year. Its sales also decreased 7 per cent to $443.1 million and the comparable sales decreased 8 per cent following a decrease of 9 per cent in Q2 FY17.

Madewell sales increased 19 per cent to $93.1 million. Madewell comparable sales increased 11 per cent following an increase of 3 per cent in the second quarter last year. The company’s gross margin increased to 38.6 per cent from 35.7 per cent in the second quarter last year.

Selling, general and administrative (SGA) expenses were $210.1 million, or 37.5 per cent of revenues, compared to $196.5 million, or 34.5 per cent of revenues in the second quarter last year. Excluding transformation costs of $14 million and transaction costs of $13.7 million (incurred in connection with the company's debt exchange and refinancing), SGA expenses were $182.4 million, or 32.5 per cent of revenues this year, said the company in a press release.

Operating income was $2.6 million compared to $6.7 million in the second quarter last year. The second quarter this year includes transformation costs of $14 million and transaction costs of $13.7 million.

J Crew’s net loss was $20.7 million compared to $8.6 million in the second quarter last year. The second quarter this year includes the impact of transformation and transaction costs.

Adjusted EBITDA increased $24.8 million, or 65 per cent, to $63.1 million from $38.3 million in the second quarter last year.

"Since joining J Crew in July, I have come to a better understanding of how these iconic American brands can be made to play a more meaningful role in our lives. Overall, I am optimistic about the opportunities that lie ahead, particularly when reviewing the strong talent, capabilities and commitment within the organisation. The team delivered solid progress on our transformation plan during the second quarter, highlighted by expansion in gross margin and reduced expenses that drove an increase in Adjusted EBITDA. And I am confident about evolving our brand strategy to drive long term profitable growth," said Jim Brett, chief executive officer, J Crew.

During the first half, total revenues decreased 4 per cent to $1,092.9 million. Comparable company sales decreased 7 per cent following a decrease of 7 per cent in the first half last year. J Crew sales decreased 9 per cent to $871.6 million and its comparable sales decreased 10 per cent following a decrease of 9 per cent in the first half last year.

Madewell sales increased 18 per cent to $177.8 million and comparable sales increased 10 per cent following an increase of 4 per cent in the first half last year. Gross margin of the company increased to 37 per cent from 35.9 per cent in the first half last year.

SGA expenses were $420.6 million, or 38.5 per cent of revenues, compared to $388.8 million, or 34.2 per cent of revenues in the first half last year. Excluding transformation costs of $19.6 million, transaction costs of $16.2 million and severance costs of $10.7 million, SGA expenses were $374.1 million, or 34.2 per cent of revenues this year.

Operating loss of the company was $150.7 million compared with operating income of $14 million in the first half last year. The operating loss includes non-cash impairment charges of $135.1 million, transformation costs of $19.6 million, transaction costs of $16.2 million, and severance costs of $10.7 million. Operating income last year includes non-cash impairment charges of $5.4 million.

Net loss was $143.9 million compared to $16.7 million in the first half last year. The net loss this year reflects the impact of non-cash impairment charges, transformation costs, transaction costs, and severance costs. The net loss last year reflects the impact of non-cash impairment charges.

Adjusted EBITDA increased $6 million, or 7 per cent, to $89.7 million from $83.7 million in the first half last year. (KD)

Fibre2Fashion News Desk – India

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