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Refinancing Costs Hit J. Crew

The retailer was impacted by the tough selling environment and refinancing costs in the first quarter.

J. Crew Group Inc., impacted by the tough selling environment and refinancing costs, reported a net loss of $30.1 million for the first quarter ended May 3, compared to net income of $29.3 million in the first quarter a year ago.

The first quarter’s bottom line reflects a loss of $36 million, net of tax, incurred in connection with the refinancing of a term loan facility and the redemption of senior notes. The refinancing is expected to result in annual savings of $16 million in interest expense.   

 

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Adjusted earnings before interest, taxes, depreciation and amortization [EBITDA] decreased to $64.8 million from $101 million in the first quarter last year.  Operating income was $34 million, or 5.7 percent of revenues, compared to $73.6 million, or 13.1 percent of revenues in the year-ago quarter.

Revenues increased 5 percent to $592 million, with comparable company sales decreasing 2 percent. In last year’s first quarter, there was a comp gain of 5 percent. In the most recent quarter, store sales increased 2 percent to $386.4 million on top of an increase of 7 percent in the first quarter last year. Direct sales increased 12 percent to $197 million, on top of an increase of 23 percent in the first quarter last year.

Gross margin was 38.7 percent compared to 44.7 percent in the first quarter last year. Selling, general and administrative expenses were $195.2 million, or 33 percent of revenues, compared to $178.4 million, or 31.6 percent of revenues in the first quarter last year.