J. Crew Group, Inc. Announces Fourth Quarter and Fiscal 2008 Results
Fourth Quarter Loss Per Share of (
Fiscal 2008 Diluted Earnings Per Share of
-
Fourth Quarter highlights:
- Revenues decreased 3% to
$388.0 million . Store sales (Retail and Factory) decreased 3% to$252.0 million , with comparable store sales decreasing 13%. Comparable store sales increased 4% in the fourth quarter of fiscal 2007. Direct sales (Internet and Phone) decreased 2% to$123.0 million . Direct sales increased 11% in the fourth quarter of fiscal 2007. - Gross margin decreased to 27.6% of revenues from 41.3% of revenues in the fourth quarter of fiscal 2007. The decrease in gross margin is primarily due to increased markdowns and promotional selling activities.
- Operating income (loss) decreased to (
$20.4 million ), or (5.3%) of revenues, compared with$43.3 million , or 10.8% of revenues, in the fourth quarter of fiscal 2007. Operating loss in the fourth quarter of fiscal 2008 includes non-cash asset impairment charges of approximately$2.1 million related to under performing stores. - Net income (loss) in the fourth quarter of fiscal 2008 was (
$13.5 million ), or ($0.22 ) per share, and includes the impact of non-cash asset impairment charges of approximately$0.02 per share related to under performing stores. Net income was$25.0 million , or$0.39 per diluted share, in the fourth quarter of fiscal 2007.
-
Fiscal 2008 highlights:
- Revenues increased 7% to
$1,428.0 million . Store sales (Retail and Factory) increased 7% to$974.3 million , with comparable store sales decreasing 4%. Comparable store sales increased 6% in fiscal 2007. Direct sales (Internet and Phone) increased 8% to$408.9 million . Direct sales increased 22% in fiscal 2007. - Gross margin decreased to 38.9% of revenues from 44.1% of revenues in fiscal 2007. The decrease in gross margin is primarily due to increased markdowns and promotional selling activities in the fourth quarter.
- Operating income decreased 44% to
$96.7 million , or 6.8% of revenues, compared to$172.5 million , or 12.9% of revenues, in fiscal 2007. Operating income in fiscal 2008 includes non-cash asset impairment charges of approximately$2.7 million related to under performing stores. - Net income for fiscal 2008 was
$54.1 million , or$0.85 per diluted share, and includes the impact of non-cash asset impairment charges of approximately$0.03 per share related to under performing stores. Net income was$97.1 million , or$1.52 per diluted share in fiscal 2007.
- Balance Sheet highlights as of
- Cash and cash equivalents were
$146.4 million at the end of the fourth quarter and include the impact of voluntary principal payments of debt of$25.0 million made during fiscal 2008. Cash and cash equivalents were$131.5 million at the end of fiscal 2007. - Inventories at the end of the fourth quarter were
$187.0 million , reflecting the impact of 40 net stores opened since the end of fiscal 2007. Inventory per square foot increased 7% at the end of fiscal 2008 compared to the end of fiscal 2007.
Guidance
As the economy has continued to weaken and become more unpredictable, it
has become more difficult to accurately predict results. Given the
uncertainty surrounding the economic environment, the Company will suspend
providing annual guidance. The Company will continue to provide guidance on a
quarter to quarter basis. The Company currently expects first quarter fiscal
2009 diluted earnings per share in the range of
Conference Call Information
A conference call to discuss fourth quarter results is scheduled for
today,
About
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, the performance of the Company's products within the prevailing retail environment, 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, Three Months Three Months Fiscal Year Fiscal Year
except percentages Ended Ended Ended Ended
and per share January 31, February 2, January 31, February 2,
amounts) 2009 2008 2009 2008
Net sales
Stores $252,026 $260,627 $974,284 $914,810
Direct 122,957 126,020 408,916 377,444
374,983 386,647 1,383,200 1,292,254
Other 13,054 13,288 44,770 42,469
Total Revenues 388,037 399,935 1,427,970 1,334,723
Costs of goods sold,
buying and occupancy
costs 281,101 234,956 872,547 746,180
Gross Profit 106,936 164,979 555,423 588,543
As a percent of
revenues 27.6% 41.3% 38.9% 44.1%
Selling, general and
administrative
expenses 127,378 121,678 458,738 416,064
As a percent of
revenues 32.8% 30.4% 32.1% 31.2%
Operating income
(loss) (20,442) 43,301 96,685 172,479
As a percent of
revenues (5.3%) 10.8% 6.8% 12.9%
Interest expense, net 1,570 1,847 5,940 11,224
Income (loss) before
income taxes (22,012) 41,454 90,745 161,255
Provision (benefit)
for income taxes (8,463) 16,497 36,628 64,180
Net income (loss) $(13,549) $24,957 $54,117 $97,075
Income (loss) per
share:
Basic ($0.22) $0.41 $0.88 $1.61
Diluted ($0.22) $0.39 $0.85 $1.52
Weighted average
shares outstanding:
Basic 61,991 60,752 61,687 60,346
Diluted 61,991 64,003 64,027 63,748
Exhibit (2)
J. Crew Group, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands) January 31, February 2,
2009 2008
Assets
Current assets:
Cash and cash equivalents $146,430 $131,510
Inventories 187,044 158,525
Prepaid expenses and other
currents assets 34,926 33,293
Prepaid and refundable income
taxes 23,116 9,794
Total current assets 391,516 333,122
Property and equipment, net 201,675 168,292
Deferred income taxes, net 8,862 20,188
Other assets 11,756 13,994
Total assets $613,809 $535,596
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $119,719 $101,277
Other current liabilities 83,889 91,414
Deferred income taxes, net 4,049 2,382
Total current liabilities 207,657 195,073
Long-term debt 100,000 125,000
Deferred credits 73,815 67,600
Other liabilities 7,388 7,601
Stockholders' equity 224,949 140,322
Total liabilities and
stockholders' equity $613,809 $535,596
Exhibit (3)
Actual and Projected Store Count and Square Footage
Actual Fiscal
2008
Total Number of Number of Total
stores stores stores stores
open at opened closed open at
beginning of during during end of
Quarter the quarter the quarter the quarter the quarter
1st Quarter 260 7 0 267
2nd Quarter 267 9 0 276
3rd Quarter 276 15 1 290
4th Quarter 290 11 1 300
Actual Fiscal
2008
Total gross Gross square Reduction Total gross
square feet for of gross square feet
feet at stores square at end of
beginning opened or feet for the quarter
of the expanded stores
quarter during the closed or
quarter downsized
during the
Quarter quarter
1st Quarter 1,688,016 38,685 (2,261) 1,724,440
2nd Quarter 1,724,440 41,949 (7,899) 1,758,490
3rd Quarter 1,758,490 67,657 (10,304) 1,815,843
4th Quarter 1,815,843 54,471 (6,181) 1,864,133
Projected Fiscal
2009
Total stores Number of Number of Total stores
open at stores stores open at
beginning opened closed end of
of the during during the quarter
Quarter quarter the quarter the quarter
1st Quarter 300 11 2 309
2nd Quarter 309 8 0 317
3rd Quarter 317 4 0 321
4th Quarter 321 2 0 323
Projected Fiscal
2009
Total gross Gross square Reduction Total gross
square feet for of gross square
feet at stores square feet feet at
beginning opened or for stores end of
of the expanded closed or the quarter
quarter during the downsized
quarter during the
quarter
Quarter
1st Quarter 1,864,133 49,783 (8,358) 1,905,558
2nd Quarter 1,905,558 32,392 0 1,937,950
3rd Quarter 1,937,950 18,107 0 1,956,057
4th Quarter 1,956,057 9,512 0 1,965,569
SOURCE
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