Revenues rise 22% at apparel retailer J.Crew in H1 FY’12

August 30, 2012 - United States Of America

J.Crew Group, Inc. announced financial results for the second quarter and first half of fiscal 2012.

On March 7, 2011, J.Crew was acquired by investment funds affiliated with TPG Capital, L.P. and Leonard Green & Partners, L.P.  Although the Company continued as the same legal entity after the acquisition, last year's financial statements were prepared for the following periods: (i) March 8, 2011 to July 30, 2011 (Successor) and (ii) January 30, 2011 to March 7, 2011 (Predecessor).

Second Quarter highlights:

  • Revenues increased 21% to $525.5 million, with comparable company sales increasing 14%.  Comparable company sales increased 3% in the second quarter last year.  Store sales increased 24% to $384.0 million.  Store sales increased 5% in the second quarter last year.  Direct sales increased 16% to $134.0 million following an increase of 13% in the second quarter last year. 
  • Gross margin increased to 45.1% from 36.5% in the second quarter last year.  Last year included amortization of inventory step-up from purchase accounting of $22 million.     
  • Selling, general and administrative expenses increased to $174.7 million, or 33.2% of revenues, from $146.4 million, or 33.7% of revenues, in the second quarter last year.  This year reflects additional share-based and incentive compensation of $10 million.  Last year included transaction-related litigation costs of $6.5 million.
  • Operating income increased $49.8 million to $62.1 million, or 11.8% of revenues, compared to $12.3 million, or 2.8% of revenues, in the second quarter last year.  Operating income last year was negatively impacted by amortization of inventory step-up and transaction-related litigation costs noted above.        
  • Net income was $22.0 million compared with a net loss of $10.5 million in the second quarter last year. The net loss last year included the after-tax effect of the amortization of inventory step-up and transaction-related litigation costs noted above.    
  • Adjusted EBITDA increased $24.5 million to $88.7 million compared to $64.2 million in the second quarter last year.  .

First Half highlights:

  • Revenues increased 22% to $1,029.0 million, with comparable company sales increasing 15%.  Comparable company sales were flat in the first half last year.  Store sales increased 25% to $738.0 million.  Store sales increased 1% in the first half last year.  Direct sales increased 17% to $277.4 million following an increase of 9% in the first half last year.  
  • Gross margin increased to 46.3% from 43.1% in the first half last year.

  • Selling, general and administrative expenses increased to $338.8 million, or 32.9% of revenues, from $271.0 million,or 32.1% of revenues, in the first half last year.  This year reflects additional share-based and incentive compensation of $17 million.
  • Operating income increased $45.0 million to $137.7 million, or 13.4% of revenues, compared to $92.7 million, or 11.0% of revenues, in the first half last year.
  • Net income was $52.7 million compared to $25.3 million in the first half last year.
  • Adjusted EBITDA increased $51.4 million to $190.3 million compared to $138.9 million in the first half last year.   

Balance Sheet highlights:  

  • Cash and cash equivalents were $213.4 million compared to $88.3 million at the end of the second quarter last year.
  • Total debt was $1,588 million, consisting of the seven-year senior secured term loan of $1,188 million and the eight-year senior unsecured notes of $400 million, compared to $1,597 million at the end of the second quarter last year.
  • Inventories were $282.8 million compared to $260.1 million at the end of the second quarter last year.  Inventories last year included a purchase accounting step-up adjustment and lower in-transit inventories compared to this year.  Inventories and inventories per square foot, adjusted for purchase accounting and in-transit last year, increased 24% and 15%, respectively.

J.Crew Group, Inc. is a nationally recognized multi-channel retailer of women's, men's and children's apparel, shoes and accessories.