By  on May 29, 2008

J. Crew Group reported increased first-quarter net income, with positive response to its seasonal offerings and qualityupgrades, but cut its full-year earnings outlook.

The specialty retailer on Thursday said net income rose 23.7 percent to $30.5 million, or 48 cents a diluted share, compared with $24.6 million, or 39 cents a diluted share, in the year-ago quarter.

Revenues gained 14.6 percent to $340.6 million, with store sales up 14 percent to $229.1 million and comparable-store sales growing 2 percent. Direct sales (Internet and catalogs) rose 17 percent to $100.9 million.

Gross margin increased to 46.9 percent of revenues from 46.6 percent. Operating income increased 20 percent to $53 million, or 15.6 percent of revenues, compared with $44.4 million.

“I am pleased with our first-quarter results,” said Millard “Mickey” Drexler, chairman and chief executive officer. “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.”

However, the company said it anticipates fiscal 2008 diluted earnings per share in the range of $1.70 to $1.75, compared with its previous guidance of $1.85 to $1.87. Fiscal 2007 diluted earnings per share were $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 about 11 percent.

J. Crew expects second-quarter diluted earnings per share in the range of 31 cents to 33 cents.

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