J. Crew Group Inc., citing the impact of non-cash impairment charges,  reported a net loss of $607.8 million in the third quarter ended Nov. 1, compared with net income of $35.4 million a year ago.

The non-cash impairment charges of $684 million led to an operating loss of $636.3 million compared with operating income of $82.9 million in the third quarter last year.

Adjusted earnings before interest, taxes, depreciation and amortization were $80.9 million compared to $110.4 million in the third quarter last year.

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Revenues in the quarter increased 6 percent to $655.2 million, with comparable company sales decreasing 2 percent. Store sales increased 4 percent to $437.8 million  while direct sales increased 10 percent to $207.8 million.

J. Crew said that for the first and second quarters of fiscal 2014, it determined that “there was substantial deterioration in the excess of fair value over the carrying value of its stores reporting unit.   During the third quarter, the company saw a further significant reduction in the profitability of its Stores reporting unit, primarily driven by performance of women’s apparel and accessories in stores, which the Company expects to continue at least through the first quarter of fiscal 2015.”
Gross margin was 40.2 percent compared to 43.9 percent in the third quarter last year.

Selling, general and administrative expenses were $215.7 million, or 32.9 percent of revenues, compared to $188.6 million, or 30.5 percent of revenues in the third quarter last year.


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