J. Crew Group delivered first-quarter earnings Thursday that surged on robust gross margins and strong same-store sales.
For the three months ended May 5, net income more than tripled to $24.6 million, or 39 cents a diluted share, from $7.8 million, or 12 cents, in the year-ago period. Analysts expected earnings at about 30 cents per share.
Sales for the quarter rose 20 percent to $201 million from $167.1 million, while same-store sales jumped 13 percent. Total revenue rose 24 percent to $297 million. Adjusting for shifts in the retail calendar, comps increased 8 percent.
Millard "Mickey" Drexler, chairman and chief executive officer, said in an interview that in "the macro sense, what we are seeing is that our customers want to buy things that will stay in their closet for a long time. They want to upgrade their wardrobe and replenish, and turn to us for our classics. So we look to play long term.
"Another big trend we are seeing is people are starting to use us as an alternative for their designer needs, coming to us for their high-end specialty store and designer store merchandise," Drexler explained.
On a conference call with analysts, Drexler said, "As we move into the second quarter, we continue to drive productivity through executing our store, direct and new concept growth plans as well as maximizing our inventory investments. Our number one focus is and will always be meeting our customer's needs. When it comes to satisfying our customers, there are no layers of management here to get through, and we don't sleep at night until they have all been satisfied. Also importantly, as we have said before, we plan the business conservatively with midsingle-digit comps and commensurate inventory and maintain our focus on productive real estate."
During the quarter, the gross margin rate increased to 46.6 percent from 45.5 percent in the first quarter of 2006. Direct sales gained 31 percent to $86.6 million.
The preppy apparel retailer said on a conference call to Wall Street that it expects second-quarter earnings in the range of 26 cents to 28 cents a diluted share. Full-year earnings are expected to be in the range of $1.37 to $1.41 a diluted share from previous guidance of $1.27 to $1.31 a diluted share.During the quarter the company opened six new J. Crew stores and plans on rolling out 37 stores this year. With Crewcuts, more stores are also planned.
"We expanded distribution of Crewcuts during the quarter, opening 12 new shopping shops and one new stand-alone store in Palm Beach Gardens, Fla.," Drexler said on the call. "We now operate 24 shopping shops and three stand-alone Crewcut stores, and plan to open additional five to 10 shopping shops and one stand-alone for the balance of the year."
In an interview, Drexler said the company sees Crewcuts as being no different than J. Crew. "We started it because we found parents wanted a better alternative for their children," he said. "If you look at the market, there are not many better alternatives out there. We don't want to be the biggest children's retailer. We want to be the best."
Shares of J. Crew rose $1.88 to $46.75 in after-market trading after closing up 7.7 percent to $44.87.
EXCLUSIVE: @tomford is opening its first-ever beauty store. The boutique, which opens November 20 in London’s Covent Gardens, was designed with the over-the-top glam Ford is known for. Read the full story on WWD.com, link in bio. #wwdbeauty #wwdnews (📷: Simon Wagner) #TomFordBeauty
New York-based DJ @harleyvnewton threw a party to celebrate the holiday collection of her dress and pajama line @hvn at the Ladurée Beverly Hills. It Girls @katebosworth, @rashidajones and more joined in on the fun, which included cocktails, croque monsieur sandwiches and a photo booth. #wwdfashion (📷: Owen Kolasinski/BFA.com)
For the holidays, @Burberry partnered with 20-year-old artist @blondeymccoy on a series of three outdoor murals in downtown Manhattan. The murals are McCoy’s interpretation of a Christmas eve party, the idea of charity and the spirit of family. His third mural, pictured here, is the most personal. The image depicts McCoy’s grandparents and father in London’s Trafalgar Square in the Seventies. “My work often features lots of sentimental objects.” #wwdeye
For spring 2018, designers applied bold colors and cartoonish motifs on everything from sneakers and belts to key chains. See all the top men’s accessories trends on WWD.com. #wwdtrends (📷: George Chinsee; Prop Styling by @rnasti; Market Editor: @luiscampuzano)
The @dior-sponsored @guggenheim international gala pre-party has a history of drawing cool-girl musical acts to serenade the crowd –– and last night was no exception. @haimtheband performed songs both new and old, and lured a star-studded audience with the likes of Rebecca Hall, Kate Mara, Mamoudou Athie and more. #wwdeye (📷: @lexieblacklock)
In a partnership between the @metopera and the @englishnationalopera, “Marnie” was born. The opera, with costumes sponsored by @mrporterlive, is an adaptation of the 1961 thriller by Winston Graham. Arianne Phillips, who created the costumes, is no rookie: She’s styled Madonna for her tours and created costumes for a myriad of films in the past. Read WWD’s interview with Phillips, where she talks about her inspiration for the opera’s costumes on WWD.com #wwdfashion
@barneysnyc took a different approach to their holiday windows this year. Instead of Christmas decor, Barneys tapped @thehaasbrothers to tell a story of positivity, gratitude and inclusivity via heartwarming silliness and humor. “It’s about kids and it’s about coming together and being family and loving each other,” said Simon Haas. #wwdfashion (📷: @joshuascottphoto)
Beauty influencer @kandeejohnson makes her foray into hair care with a collaboration with @ogx_beauty — making it the first time that OGX has teamed up for a product creation. The collab includes shampoos and conditioners in three scents. At 39 and a mom, Johnson is a different profile than the emerging social media stars, but is considered one of the pioneers of the digital beauty influencer world. Read WWD’s interview with her on wwd.com, including the strangest beauty product she’s ever tried #wwdbeauty