J. Crew Group, Inc. Announces First Quarter Fiscal 2010 Results
First Quarter Revenues Rise 20% to $413.9 million
First Quarter Diluted Earnings Per Share of $0.68
NEW YORK, May 27, 2010 /PRNewswire via COMTEX/ --J. Crew Group, Inc. (NYSE: JCG) today announced financial results for the three months ended May 1, 2010 (first quarter fiscal 2010).
First quarter highlights:
- Revenues increased 20% to $413.9 million. Store sales increased 20% to $290.0 million, with comparable store sales increasing 15%. Comparable store sales decreased by 5% in the first quarter of fiscal 2009. Direct sales (Internet and Phone) increased 20% to $114.4 million. Direct sales decreased by 6% to $95.4 million in the first quarter of fiscal 2009.
- Gross margin increased to 49.0% of revenues from 42.2% of revenues in the first quarter of fiscal 2009. The increase in gross margin is primarily related to decreased markdowns and promotional selling in the first quarter of 2010 compared to the first quarter of 2009.
- Operating income increased 113.8% to $75.4 million, or 18.2% of revenues, compared with operating income of $35.3 million, or 10.2% of revenues, in the first quarter of fiscal 2009.
- Net income was $44.7 million, or $0.68 per diluted share. Net income was $20.4 million, or $0.32 per diluted share, in the first quarter of fiscal 2009.
Millard Drexler, J. Crew's Chairman and CEO stated: "We are very pleased with our first quarter results. We are and will continue to be focused on our mission - to innovate in our design, style, quality and customer service and to invest in our business, our associates and our customers for the long term."
Balance Sheet highlights as of May 1, 2010
- Cash and cash equivalents were $332.3 million at the end of the first quarter compared to $154.6 million at the end of the first quarter in the prior year.
- Inventories at the end of the first quarter were $193.1 million, compared to $193.9 million at the end of the first quarter of fiscal 2009. Inventory per square foot decreased 3.9% as compared to the end of the first quarter of fiscal 2009.
Guidance
The Company issued its initial guidance for the second quarter and updated its guidance for fiscal 2010. The Company currently expects second quarter fiscal 2010 diluted earnings per share in the range of $0.40 to $0.45 and fiscal 2010 diluted earnings per share in the range of $2.35 to $2.45, as compared to its previous guidance range for fiscal 2010 of $2.20 to $2.30 and fiscal 2009 diluted earnings per share of $1.91.
Conference Call Information
A conference call to discuss first quarter results is scheduled for today, May 27, 2010, 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 3, 2010 and can be accessed by dialing (877) 660-6853 and entering account number 3055 and conference ID number 350714.
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 27, 2010, the Company operates 246 retail stores (including 220 J.Crew retail stores, 9 crewcuts and 17 Madewell stores), the J. Crew catalog business, jcrew.com, madewell.com, and 81 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 percentages and per share Three Months Three Months data) Ended Ended May 1, 2010 May 2, 2009 ----------- ----------- Net sales Stores $289,981 $240,726 Direct 114,355 95,360 ------- ------ 404,336 336,086 Other 9,543 9,684 ----- ----- Total Revenues 413,879 345,770 Costs of goods sold, buying and occupancy costs 211,281 199,833 ------- ------- Gross Profit 202,598 145,937 As a percent of revenues 49.0% 42.2% Selling, general and administrative expenses 127,179 110,669 As a percent of revenues 30.7% 32.0% ---- ---- Operating income 75,419 35,268 As a percent of revenues 18.2% 10.2% Interest expense, net 627 1,077 --- ----- Income before income taxes 74,792 34,191 Provision for income taxes 30,066 13,746 ------ ------ Net income $44,726 $20,445 ======= ======= Income per share: Basic $0.71 $0.33 Diluted $0.68 $0.32 Weighted average shares outstanding: Basic 63,237 62,130 Diluted 66,053 63,319 Exhibit (2) J. Crew Group, Inc. Condensed Consolidated Balance Sheets (Unaudited) May 1, January 30, May 2, (In thousands) 2010 2010 2009 -------------- ------- ------------ ------- Assets Current assets: Cash and cash equivalents $332,302 $298,107 $154,578 Inventories 193,081 190,231 193,923 Prepaid expenses and other current assets 27,578 29,522 30,746 Prepaid income taxes - 1,455 9,892 --- ----- ----- Total current assets 552,961 519,315 389,139 Property and equipment, net 189,986 194,615 205,683 Other assets 24,820 24,628 20,161 ------ ------ ------ Total assets $767,767 $738,558 $614,983 ======== ======== ======== Liabilities and Stockholders' equity Current liabilities: Accounts payable $105,354 $127,733 $97,503 Other current liabilities 90,793 106,652 83,871 Current portion of long- term debt - - 1,100 Income taxes payable 17,699 - - Deferred income taxes, net 958 958 4,049 --- --- ----- Total current liabilities 214,804 235,343 186,523 Long-term debt 49,229 49,229 98,900 Deferred credits 66,508 67,646 73,825 Other liabilities 10,474 10,462 7,361 Stockholders' equity 426,752 375,878 248,374 ------- ------- ------- Total liabilities and stockholders' equity $767,767 $738,558 $614,983 ======== ======== ======== Exhibit (3) Actual and Projected Store Count and Square Footage (Note 1) Fiscal 2010 Total Total stores (Note 2) Number of stores open at Number of stores stores open at beginning of opened during closed during end of the the quarter the quarter the quarter quarter Quarter ------------ ---------------- ------------- ----------- ------- 1st Quarter (Actual) 321 4 0 325 2nd Quarter (Projected) 325 3 1 327 3rd Quarter (Projected) 327 3 0 330 4th Quarter (Projected) 330 5 0 335 ------------ --- --- --- --- Reduction of Total gross Gross square gross square Total gross square feet for feet for stores square feet at stores opened closed or feet at Fiscal 2010 beginning of or expanded downsized end of the quarter during the during the the quarter quarter quarter ----------- ----------- ----------- ----------- Quarter ------- 1st Quarter (Actual) 1,958,140 20,168 (615) 1,977,693 2nd Quarter (Projected) 1,977,693 12,631 (7,822) 1,982,502 3rd Quarter (Projected) 1,982,502 9,764 0 1,992,266 4th Quarter (Projected) 1,992,266 29,595 0 2,021,861 Note 1 - Store count and square footage summary excludes three clearance store locations. Above summary also includes one factory store that is temporarily closed at the time of this announcement due to flooding. Note 2 - Actual and Projected number of stores opened during Fiscal 2010 By quarter: 1st Quarter - two retail and two factory stores (Actual). 2nd Quarter -one retail, one factory and one Madewell store (Projected). 3rd Quarter - two retail and one Madewell store (Projected). 4th Quarter - three factory, one factory crewcuts and one Madewell stores (Projected).
SOURCE J.Crew Group, Inc.