NEW YORK — J. Crew Group Inc. is running strong and bringing its business to new markets.
“It’s been a nice year so far,” Millard “Mickey” Drexler, chairman and chief executive officer, told WWD. “Every day we get a bit smarter about our business, but you can never let your guard down.”
On Wednesday, the company reported a robust second quarter, marked by a return to the black and strong sales and full-price selling across several categories. Executives also cited plans to add more men’s wear stores this year, and divulged the time frame for opening the first J. Crew stores in Europe and Asia, meaning the company is getting close to signing leases. A London store is seen opening in the second half of 2013, and a store in Hong Kong is seen opening in the first half of 2014.
Last year, J. Crew crossed borders for the first time by launching international shipping, partnering with Net-a-porter, and opening a store in the Yorkdale Shopping Centre in Toronto, marking the first brick-and-mortar move in its international expansion plan. Last March J. Crew expanded its international shipping to 107 countries, up from 29, and more recently revealed a plan to distribute to Lane Crawford in Asia.
J. Crew reported net income of $22 million for the second quarter ended July 28, compared with a $10.5 million loss in the year-ago period. Last year’s loss was due to nonrecurring inventory and litigation costs associated with its acquisition by TPG Capital L.P. and Leonard Green & Partners L.P. in March 2011. In the 2011 period, the amortization of inventory from purchase accounting cost the company $22 million, and litigation costs reached $6.5 million.
Total revenues in the latest quarter rose 21 percent to $525.5 million, while comparable company sales increased 14 percent. Gross margin increased to 45.1 percent from 36.5 percent, reflecting healthy full-price selling.
Operating income increased to $62.1 million, compared with $12.3 million in the second quarter of 2011.
Men’s wear, according to the company, increased at a higher rate than women’s last quarter, and executives cited plans to open two more units this year, including a Ludlow shop in Copley Place in Boston on Sept. 18, and a J. Crew men’s shop in The Grove in Los Angeles on Nov. 21, bringing the total to nine men’s units. J. Crew men’s wear, Drexler said, has become “quite well known as a strong franchise. Our Ludlow suit business is a business unto itself, as is our shirt business.” Ludlow is a J. Crew label.
With the rollout of men’s stores, “We are ramping up, only selectively,” Drexler said. “We are not running fast. We are running strategically and appropriately….I don’t think men have had a great choice in the last number of years to buy high quality at prices that are reasonable.”
Overall at the company, “We intensified our product offerings from a creative point of view,” Drexler said. “I would characterize the J. Crew product and merchandising as standing out in the marketplace. People voted with their pocketbooks, but we worked hard at it, and we continue to innovate and create every day….A lot of designers sell primarily accessories. We are in the apparel and accessory business.”
Drexler said that the brand’s pricing below designer and the fact that J. Crew is not sold at discount in channels other than its own “long-term builds loyalty into the customer base.” He also said not being a business that designs products flaunting the logo enhances the appeal. “We maintain the friendliness of the brand.”
Drexler also said that certain categories were identified for intensification this year, though he declined to specify, and also stressed the marketing efforts, including reformulating the catalogue, were intensified as well.
Regarding the Madewell brand, Drexler said, “We are expanding it both storewise and onlinewise. We’re very excited. We’re launching our fourth catalogue in September.”
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews
“Stranger Things” is getting a new cast member for season 2. Meet @sadiesink_, the 15-year-old who will be joining the Netflix series for its new season. You may recognize her from “The Glass Castle” with Brie Larson and Woody Harrelson, but the Texas native’s next role goes in an entirely different direction. She describes her character, Max, as “a rough and tumble skater girl [who] becomes friends with the boys at school.” The second season debuts on October 27. (📷: @jgreenery) #wwdeye
Amid the Harvey Weinstein controversy, there’s another sector that’s being put under the spotlight for sexual abuse: the modeling industry. While rumors about abuse and sexual harassment of female and male models — and the photographers, agents and others who perpetrated it — have circulated within the fashion world for years, model @cameronrussell started posting stories from models on Instagram last week about abusive situations they’ve encountered — from sexual harassment and molestation to attempted rape. Over 75 have weighed in so far. Read more on WWD.com. Link in bio. #wwdnews
To celebrate its 16th anniversary, @dylanscandybar tapped designers and celebrities to create mosaics out of candy. The mosaics will be auctioned off to support the philanthropic cause of each participant’s choice. Pictured here is the mural created by @aliceandolivia's Stacey Bendet. For a first look at some of the other artwork being unveiled tonight, go to WWD.com. #wwdeye
The annual Veuve Clicquot Polo Classic in Pacific Palisades this weekend drew Kate Hudson, Tracee Ellis Ross, Laura Dern and more. See pictures of the star-studded event on WWD.com. (📷: @chelsealaurenla) #wwdeye
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye
"Nowadays when life is not so happy with everything going on in the world, I think people come to me for a little bit of whimsy and color and fun." - Designer Rebecca De Ravenel on her cult-favorite jewelry line. (📸 : @vsteves) #wwd40
“Everyone is talking about how the retail industry is struggling, but I think it’s an incredible time because brands who are doing something different and innovative are setting themselves up for the future,” said @adamgoldston, who founded the luxury athletic brand @apl with his brother @ryangoldsten. The Goldston’s are part of WWD’s 40 under 40: a group of industry notables. See the rest of the list on WWD.com. (📷: @vsteves) #wwd40
@eyeswoon blogger Athena Calderone debuted her first-ever cookbook, “Cook Beautiful,” which is heavily centered on the presentation and visual expression of food. Pictured here are her miso glazed carrots from the book. Get the recipe on WWD.com. (📷: @johnny_miller_) #wwdeye