J. Crew Group, Inc. Announces First Quarter Fiscal 2009 Results
First Quarter Diluted Earnings Per Share of
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 millionin 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 millionfor severance and related costs associated with our workforce reduction announced in February 2009and non-cash asset impairment charges of $1.0 millionrelated to underperforming stores.
- Net income was
$20.4 million, or $0.32per diluted share and includes the impact of severance and asset impairment charges of approximately $0.02. Net income was $30.5 million, or $0.48per diluted share, in the first quarter of fiscal 2008.
Balance Sheet highlights as of
- Cash and cash equivalents were
$154.6 millionat the end of the first quarter compared to $121.5 millionat 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.
The Company currently expects second quarter fiscal 2009 diluted earnings
per share in the range of
Conference Call Information
A conference call to discuss first quarter results is scheduled for today,
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
Chief Administrative Officer and Chief Financial Officer,