J. Crew Group, Inc. Announces First Quarter Fiscal 2008 Results
First Quarter Revenues Rise 15% to $340.6 million
First Quarter Operating Income Increases 20% to $53.0 million
Revises Guidance for Fiscal 2008
NEW YORK, May 29 /PRNewswire-FirstCall/ -- J. Crew Group, Inc. [NYSE: JCG] today announced financial results for the three months ended May 3, 2008 (first quarter fiscal 2008).
First quarter highlights:
- Revenues increased 15% to $340.6 million. Store sales (Retail and Factory) increased 14% to $229.1 million, with comparable store sales increasing 2%. Comparable store sales increased 8% in the first quarter of fiscal 2007. Direct sales (Internet and Catalog) rose by 17% to $100.9 million. Direct sales increased 31% to $86.6 million in the first quarter of fiscal 2007.
- Gross margin increased to 46.9% of revenues from 46.6% of revenues in the first quarter of fiscal 2007.
- Operating income increased 20% to $53.0 million, or 15.6% of revenues, compared to $44.4 million, or 14.9% of revenues, in the first quarter of fiscal 2007.
- Net income was $30.5 million, or $0.48 per diluted share, compared to $24.6 million, or $0.39 per diluted share, in the first quarter of fiscal 2007.
Millard Drexler, J. Crew's Chairman and CEO stated: "I am pleased with our first quarter results. We are on a mission to be the best we can be on quality, style, design and service for our customers. We are dedicated to continuing to always build and invest in our company for the long term."
The Company issued its initial guidance for the second quarter and updated its guidance for fiscal 2008. The Company currently expects second quarter diluted earnings per share in the range of $0.31 to $0.33. For fiscal 2008, the Company currently expects diluted earnings per share in the range of $1.70 to $1.75, as compared to its previous guidance range of $1.85 to $1.87 and fiscal 2007 diluted earnings per share of $1.52. The Company's revised expectations for fiscal 2008 include comparable store sales growth in the range of flat to low single-digits, Direct sales growth in the high single-digits and net square footage expansion of approximately 11%.
Balance Sheet highlights as of May 3, 2008
- Inventories at the end of the quarter were $174.5 million, reflecting the impact of 34 net stores opened since the first quarter of fiscal 2007 and 7 stores opened since the end of fiscal 2007 and the timing of inventory receipts as compared to last year's first quarter.
- Long-term debt was reduced to $100.0 million, which reflects the Company's voluntary principal payments of $25.0 million during the first three months of fiscal 2008.
Conference Call Information
A conference call to discuss first quarter results is scheduled for today, May 29, 2008, 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 6, 2008 and can be accessed by dialing (877) 660-6853 and entering account number 3055 and conference ID number 286170.
About J. Crew Group, Inc.
J. Crew Group, Inc. is a nationally recognized multi-channel retailer of women's and men's apparel, shoes and accessories. As of May 29, 2008, the Company operates 206 retail stores (including 4 crewcuts and 8 Madewell stores), the J. Crew catalog business, jcrew.com, and 65 factory outlet stores. Additionally, certain product, press release and SEC filing information concerning the Company are available at the Company's website www.jcrew.com.
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) Three Months Three Months (In thousands, except Ended Ended percentages and share data) May 3, 2008 May 5, 2007 Net sales Stores $229,109 $201,009 Direct 100,934 86,570 330,043 287,579 Other 10,536 9,733 Total Revenues 340,579 297,312 Costs of goods sold, buying and occupancy costs 180,692 158,774 Gross Profit 159,887 138,538 As a percent of revenues 46.9 % 46.6 % Selling, general and administrative expenses 106,841 94,165 As a percent of revenues 31.4 % 31.7 % Operating income 53,046 44,373 As a percent of revenues 15.6 % 14.9 % Interest expense, net 2,370 3,442 Income before income taxes 50,676 40,931 Provision for income taxes 20,175 16,282 Net income $30,501 $24,649 Income per share: Basic $0.50 $0.41 Diluted $0.48 $0.39 Weighted average shares outstanding: Basic 61,192 59,731 Diluted 64,076 63,248 Exhibit (2) J. Crew Group, Inc. Condensed Consolidated Balance Sheets (Unaudited) (In thousands) May 3, 2008 February 2, 2008 May 5, 2007 Assets Current assets: Cash and cash equivalents $121,532 $131,510 $81,321 Inventories 174,493 158,525 144,759 Prepaid expenses and other current assets 32,850 33,293 37,242 Refundable income taxes 8,600 9,794 8,600 Total current assets 337,475 333,122 271,922 Property and equipment, net 174,438 168,292 125,208 Other assets 33,299 34,182 31,792 Total assets $545,212 $535,596 $428,922 Liabilities and Stockholders' equity Current liabilities: Accounts payable $95,657 $101,277 $66,358 Other current liabilities 77,816 93,796 65,883 Income taxes payable 6,669 - 5,675 Total current liabilities 180,142 195,073 137,916 Long-term debt 100,000 125,000 175,000 Deferred credits 68,388 67,600 64,489 Other liabilities 7,715 7,601 6,435 Stockholders' equity 188,967 140,322 45,082 Total liabilities and stockholders' equity $545,212 $535,596 $428,922 Exhibit (3) Actual and Projected Store Count and Square Footage Fiscal 2008 Total stores Number of Number of Total open at stores stores stores beginning opened closed open of during during at end of Quarter the quarter the quarter the quarter the quarter 1st Quarter (Actual) 260 7 0 267 2nd Quarter (Projected) 267 8 0 275 3rd Quarter (Projected) 275 14 0 289 4th Quarter (Projected) 289 14 2 301 Fiscal 2008 Gross Reduction Total square of gross gross feet square feet Total square for stores for stores gross feet at opened or closed or square beginning expanded downsized feet at of during during the end of the Quarter the quarter the quarter quarter quarter 1st Quarter (Actual) 1,688,016 38,685 (2,261) 1,724,440 2nd Quarter (Projected) 1,724,440 36,313 (7,899) 1,752,854 3rd Quarter (Projected) 1,752,854 61,895 (4,304) 1,810,445 4th Quarter (Projected) 1,810,445 71,406 (12,181) 1,869,670
SOURCE J. Crew Group, Inc.
CONTACT: James Scully, Chief Financial Officer, of J. Crew Group, Inc.,
+1-212-209-8040, Investors, Allison Malkin, Chad Jacobs, Joe Teklits, all of
Integrated Corporate Relations, +1-203-682-8200
Web site: http://www.jcrew.com