First Quarter Revenues of $345.8 million
First Quarter Diluted Earnings Per Share of $0.32
NEW YORK, May 28 /PRNewswire-FirstCall/ -- J. Crew Group, Inc. (NYSE: JCG) today announced financial results for the three months ended May 2, 2009 (first quarter fiscal 2009).
First quarter highlights:
- Revenues increased 2% to $345.8 million. Store sales (Retail and Factory) increased 5% to $240.7 million, with comparable store sales decreasing 5%. Comparable store sales increased 2% in the first quarter of fiscal 2008. Direct sales (Internet and Phone) decreased 6% to $95.4 million. Direct sales increased 17% to $100.9 million in the first quarter of fiscal 2008.
- Gross margin decreased to 42.2% of revenues from 46.9% of revenues in the first quarter of fiscal 2008. The decrease in gross margin is primarily related to increased markdowns as a result of beginning of quarter inventory levels.
- Operating income decreased 34% to $35.3 million, or 10.2% of revenues, compared to $53.0 million, or 15.6% of revenues, in the first quarter of fiscal 2008. Operating income in the first quarter of fiscal 2009 includes a charge of $1.3 million for severance and related costs associated with our workforce reduction announced in February 2009 and non-cash asset impairment charges of $1.0 million related to underperforming stores.
- Net income was $20.4 million, or $0.32 per diluted share and includes the impact of severance and asset impairment charges of approximately $0.02. Net income was $30.5 million, or $0.48 per diluted share, in the first quarter of fiscal 2008.
Millard Drexler, J. Crew's Chairman and CEO stated: "We are relatively pleased with our first quarter results and while earnings were lower than last year, we did experience an improved trend in our business. We think it is clear that there is no choice in this environment than to continue to be creative and figure out where the customer is going, not to respond to where he or she has been."
Balance Sheet highlights as of May 2, 2009:
- Cash and cash equivalents were $154.6 million at the end of the first quarter compared to $121.5 million at the end of the first quarter in the prior year.
- Inventories at the end of the quarter were $193.9 million, reflecting the impact of 43 net stores opened since the first quarter of fiscal 2008. Inventory per square foot was flat to last year at the end of the first quarter of fiscal 2008.
Guidance
The Company currently expects second quarter fiscal 2009 diluted earnings per share in the range of $0.08 to $0.12.
Conference Call Information
A conference call to discuss first quarter results is scheduled for today, May 28, 2009, at 4:30 PM Eastern Time. Investors and analysts interested in participating in the call are invited to dial (877) 407-0784 approximately ten minutes prior to the start of the call. The conference call will also be webcast live at www.jcrew.com. A replay of this call will be available until June 4, 2009 and can be accessed by dialing (877) 660-6853 and entering account number 3055 and conference ID number 323565.
About J. Crew Group, Inc.
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 May 28, 2009, the Company operates 238 retail stores (including 8 crewcuts and 14 Madewell stores), the J. Crew catalog business, jcrew.com, and 76 factory outlet stores. Additionally, certain product, press release and SEC filing information concerning the Company is available at the Company's website www.jcrew.com.
Forward-Looking Statements:
Certain statements herein are "forward-looking statements" made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect the Company's current expectations or beliefs concerning future events and actual results of operations may differ materially from historical results or current expectations. Any such forward-looking statements are subject to various risks and uncertainties, including the strength of the economy, changes in the overall level of consumer spending or preferences in apparel, our ability to compete with other retailers, the performance of the Company's products within the prevailing retail environment, our strategy and expansion plans, reliance on key personnel, trade restrictions, political or financial instability in countries where the Company's goods are manufactured, postal rate increases, paper and printing costs, availability of suitable store locations at appropriate terms and other factors which are set forth in the Company's Form 10-K and in all filings with the SEC made by the Company subsequent to the filing of the Form 10-K. The Company does not undertake to publicly update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.
Exhibit (1)
J. Crew Group, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except Three Months Three Months
percentages and per Ended Ended
share data) May 2, 2009 May 3, 2008
Net sales
Stores $240,726 $229,109
Direct 95,360 100,934
336,086 330,043
Other 9,684 10,536
Total Revenues 345,770 340,579
Costs of goods sold,
buying and occupancy
costs 199,833 180,692
Gross Profit 145,937 159,887
As a percent of revenues 42.2% 46.9%
Selling, general and
administrative expenses 110,669 106,841
As a percent of revenues 32.0% 31.4%
Operating income 35,268 53,046
As a percent of revenues 10.2% 15.6%
Interest expense, net 1,077 2,370
Income before income taxes 34,191 50,676
Provision for income taxes 13,746 20,175
Net income $20,445 $30,501
Income per share:
Basic $0.33 $0.50
Diluted $0.32 $0.48
Weighted average
shares outstanding:
Basic 62,130 61,192
Diluted 63,319 64,076
Exhibit (2)
J. Crew Group, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands) May 2, January 31, May 3,
2009 2009 2008
Assets
Current assets:
Cash and cash equivalents $154,578 $146,430 $121,532
Inventories 193,923 187,044 174,493
Prepaid expenses and other
current assets 30,746 34,926 32,850
Prepaid & refundable income
taxes 9,892 23,116 8,600
Total current assets 389,139 391,516 337,475
Property and equipment, net 205,683 201,675 174,438
Other assets 20,161 20,618 33,299
Total assets $614,983 $613,809 $545,212
Liabilities and
Stockholders' equity
Current liabilities:
Accounts payable $97,503 $119,719 $95,657
Other current liabilities 83,871 83,889 77,816
Current portion of long-term
debt 1,100 800 -
Income taxes payable - - 6,669
Deferred income taxes, net 4,049 4,049 -
Total current liabilities 186,523 208,457 180,142
Long-term debt 98,900 99,200 100,000
Deferred credits 73,825 73,815 68,388
Other liabilities 7,361 7,388 7,715
Stockholders' equity 248,374 224,949 188,967
Total liabilities and
stockholders' equity $614,983 $613,809 $545,212
Exhibit (3)
Actual and Projected Store Count and Square Footage
Fiscal 2009 Total Number of Number of Total
stores stores stores stores
open opened closed open at
at beginning during during end of
of the the the the
Quarter quarter quarter quarter quarter
1st Quarter (Actual) 300 12 2 310
2nd Quarter (Projected) 310 7 0 317
3rd Quarter (Projected) 317 4 0 321
4th Quarter (Projected) 321 1 0 322
Reduction
Fiscal 2009 Gross of gross Total
Total square square gross
gross feet feet square
square for stores for stores feet
feet at opened or closed or at
beginning expanded downsized end of
of the during the during the the
Quarter quarter quarter quarter quarter
1st Quarter (Actual) 1,864,133 52,185 (8,258) 1,908,060
2nd Quarter (Projected) 1,908,060 29,992 0 1,938,052
3rd Quarter (Projected) 1,938,052 18,064 0 1,956,116
4th Quarter (Projected) 1,956,116 4,512 0 1,960,628
SOURCE J. Crew Group, Inc.
