NEW YORK — J. Crew Group Inc. sees plenty of room for expansion.
The retailer plans to open more stores in the U.S., even in markets where it already has a presence; ramp up growth in Canada, where it has eight stores; open a handful of units in London, the first of which on Regent Street will bow before the holidays, and unveil locations in Hong Kong and Tokyo.
Its men’s retail concept, with 10 units, is also ripe for growth, Stuart C. Haselden, chief financial officer, told WWD following the company’s first-quarter conference call with analysts on Thursday.
Generally, in the U.S., “we’re still identifying opportunities to densify,” he said. “Beyond that, we’re looking at markets where we’re underrepresented and continue to evaluate the men’s business, which has exciting growth potential.”
The retailer opened its first men’s factory store on Long Island during the quarter.
The expansion plans come as J. Crew’s sales continued to grow in double digits in the first quarter even as profits were pressured by markdowns and higher expenses.
For the three months ended May 4, net income declined 4.5 percent to $29.3 million from $30.7 million in the prior-year quarter.
Adjusted earnings before interest, taxes, depreciation and amortization was $101 million, compared to $101.6 million in the first quarter of last year.
Total revenues rose 12 percent to $564.1 million from $503.5 million as store sales were up 7.4 percent, to $380.2 million, and direct marketing revenues grew 22.8 percent, to $176.2 million. Comparable sales, including direct revenues and those for stores open at least a year, were up 5.5 percent.
Gross margin declined to 44.7 percent of sales from 47.6 percent in the 2012 quarter as the cost of goods sold rose 18.4 percent to $312.1 million. The bottom line was affected less by an 8.7 percent increase in selling, general and administrative expenses, to $178.4 million. Higher markdowns led to a $15.9 million decline in the merchandise margin while buying and occupancy costs were up $8 million.
Libby Wadle, president of the J. Crew brand, said the promotional pitch of the first quarter took a toll on gross margins. “It was a tough macroeconomic environment out there,” she said during the call with analysts. “With the J. Crew [brand], we had a very tough full-price comparison [over last year’s quarter]. We had to change how we planned to do business. It was about navigating through the environment in the healthiest way we could.”
Wadle said there was “frankly, a lot of competition on some of our franchise items — at lower prices. We feel good about our fashion and newness. We remain focused on innovating and inventing new franchises and looking ahead.”
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews
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@kering_official is spinning off its stake in puma in an effort to focus on its luxury brands, the brand operator announced yesterday. “We are proud to have supported the turnaround of Puma, which now has unrivaled capabilities to take full advantage of the specific dynamics of its global markets and is poised to achieve substantial growth,” said François-Henri Pinault, Kering’s chief executive officer and chairman. Artémis will become a “long-term strategic shareholder” of Puma with a 29 percent stake. #wwdnews #wwdfashion (📷: @jilliansollazzo)
The fashion world mourns for celebrated street style photographer, Nabile Quenum, who died at age 32 in Paris.
Quenum, creator of the fashion blog “J’ai Perdu Ma Veste,” was a fashion week fixture, and regularly shot for New York magazine’s The Cut, among other outlets, and brands such as Louis Vuitton, Moncler and Adidas. He was also actively involved in the #NoFreePhotos initiative, which kicked off in the fall. Read more about Quenum in @kbsmoke's story on WWD.com. #wwdnews
@verwanggang and @maisonladuree have teamed up on a dessert collab called Vera Wang Pour Ladurée. The collection, which launched this week, features a specialty macaroon, as well as a wedding cake inspired by one of the designer’s gowns. “I could not imagine a more delicate or sophisticated creation to grace any couple’s celebration,” said Wang. #wwdfashion