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Though fourth-quarter net profits declined, J. Crew Group Inc. posted strong results for 2012, including cracking $2 billion in revenues for the first time and opening a record number of stores.
This story first appeared in the March 21, 2013 issue of WWD. Subscribe Today.
For the year ended Feb. 2, net profits rose 86.7 percent to $96.1 million from $51.5 million in 2011, and revenues rose 20 percent to $2.23 billion, with a 3 percent comparable-sales gain.
Fourth-quarter net profits fell 32.5 percent to $10.2 million compared with $15.1 million in the same quarter a year ago. The company said profits were impacted by additional share-based and incentive compensation, while net income in the year-ago quarter benefited from transaction-related insurance recoveries partially offset by amortization of inventory step up. J. Crew was acquired in March 2011 by TPG Capital and Leonard Green & Partners.
“The fourth-quarter net income, if you strip out noncomparable items, was actually up,” Stuart C. Haselden, J. Crew’s chief financial officer, told WWD. “The adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] is a better apples-to-apples comparison. It was up 18 percent for Q4 to $70.4 million from $59.5 million.”
Fourth-quarter revenues increased 21 percent to $642.9 million, with comparable sales increasing 11 percent. Store sales increased 18 percent to $416.9 million; direct sales increased 27 percent.
“Q4 was a continuation of the strong trend we saw in the first three quarters with a double-digit sales increase,” Haselden said. “There was a balanced performance between stores and direct, healthy gross margin results, and for the year we saw adjusted EBITDA up 27 percent.” Also in 2012, total store sales rose 21 percent to $1.5 billion. Direct sales increased 19 percent to $651.5 million.
Haselden declined to single out any best-selling items or categories. He did say the company was pleased with its accelerated rate of store openings, having started 2012 with 362 units and concluding the year with 401. “It was the most store openings we had in any year,” Haselden said.
For 2013, the company is projecting 46 openings including its first in Europe, which will be in London during the fourth quarter, in time for holiday selling.
Last year, the retail expansion was balanced between divisions, with 17 Madewells, 14 J. Crews and eight factory outlets all opening in the U.S. There were also four J. Crew and two factory outlet openings in Canada. The company also launched jcrewfactory.com, rolled out direct distribution to over 100 countries and completed a major expansion of the distribution center in Lynchburg, Va., which handles direct orders. Capacity at the facility increased 50 percent, Haselden said.
J. Crew will stage a conference call today outlining details of expansion in 2013.