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J. Crew Q3 revenues rise 9% to $363.1 mn

26
Nov '08
J. Crew Group Inc announced financial results for the three months (third quarter) and nine months (first nine months) ended November 1, 2008.

Revenues increased 9% to $363.1 million. Store sales (Retail and Factory) increased 7% to $250.9 million, with comparable store sales decreasing 3%. Comparable store sales increased 5% in the third quarter of fiscal 2007. Direct sales (Internet and Phone) rose by 13% to $101.8 million. Direct sales increased 36% in the third quarter of fiscal 2007.

Gross margin decreased to 41.6% of revenues from 45.6% of revenues in the third quarter of fiscal 2007.

Operating income decreased 32% to $32.5 million, or 9.0% of revenues, compared to $47.7 million, or 14.3% of revenues, in the third quarter of fiscal 2007. Operating income in the third quarter of fiscal 2008 includes approximately $6 million of costs related to our Direct channel systems upgrades.

Net income was $19.0 million, or $0.30 per diluted share, compared to a net income of $26.8 million, or $0.42 per diluted share, in the third quarter of fiscal 2007.

Millard Drexler, J. Crew's Chairman and CEO stated: "Despite these difficult economic times our priorities remain the same - providing innovative product, style and design, servicing our customers and making disciplined investments. At the same time, we recognize that a sea-change has occurred with the consumer. In the near term we are not immune to the significant challenges we are all facing in retail in these unprecedented times. However, our powerful brands, unique product offerings, compelling value proposition and multi-channel operating platform position us well for the long-term."

Revenues increased 11% to $1,039.9 million. Store sales (Retail and Factory) increased 10% to $722.3 million, with comparable store sales decreasing 0.4%. Comparable store sales increased 6% in the first nine months of fiscal 2007. Direct sales (Internet and Phone) rose by 14% to $285.9 million. Direct sales increased 29% in the first nine months of fiscal 2007.

Gross margin decreased to 43.1% of revenues from 45.3% of revenues in the first nine months of fiscal 2007.

Operating income decreased 9% to $117.1 million, or 11.3% of revenues, compared to $129.2 million, or 13.8% of revenues, in the first nine months of fiscal 2007.

Net income was $67.7 million, or $1.06 per diluted share, compared to a net income of $72.1 million, or $1.13 per diluted share, in the first nine months of fiscal 2007.
Balance Sheet highlights as of November 1, 2008:

Cash and cash equivalents were $114.4 million at the end of the third quarter and include the impact of income taxes paid of $52.8 million and voluntary principal payments of debt of $25.0 million during the last 12 months.

Inventories at the end of the quarter were $250.1 million, reflecting the impact of 35 net stores opened since the third quarter of fiscal 2007 and 30 net stores opened since the end of fiscal 2007.


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