NEW YORK — As top-line growth soars, The J. Crew Group also is showing signs of operating strength and improved gross margins driven by more full-priced selling.
For the first quarter ended April 30, the purveyor of casual apparel on Thursday said net income for the three months was $5 million, which is against a loss of $24 million in the same year-ago period. Revenues jumped 44.5 percent to $211 million from $146 million.
"We are pleased with our first-quarter results with a comp-store sales increase of 37 percent and significant growth in our Direct business. Our continuing focus on quality, style and design, along with endless attention to our customers' needs, is reflected in J. Crew's performance," said Millard Drexler, chairman and chief executive officer, in a statement.
Same-store sales in the year-ago quarter rose just 4 percent.
The ceo noted that the "scarcity of our merchandise in last year's first quarter also helped contribute to this quarter's strong comp performance."
The company said operating income was $23 million against a $3 million loss in the year-ago quarter. Operating results for the quarter reflect a gross margin increase to 46 percent in 2005 from 42 percent in 2004, helped by increased full-price selling and leverage on fixed buying and occupancy costs.
Retail sales, including factory stores, climbed 40 percent to $146 million from $104 million last year, boosted by a same-store sales gain of 37 percent. Sales of the Direct business — Internet and catalogue — skyrocketed 59 percent to $59 million versus $37 million last year.
J. Crew said inventory on April 30 was $105 million, up 24 percent from a year ago. The inventory gain is consistent with the strong sales performance as well as the conservative inventory strategy in last year's comparable quarter.
Also helping the bottom line was a decline in selling, general and administrative expenses. SGA for the quarter was $74 million, or 35 percent of revenues, versus last year's $64 million, or 44 percent of revenues.
At the end of the quarter, the company operated 157 retail stores, up three from the same 2004 quarter, and 41 factory stores, one less than a year ago.
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