Driven by greater full-price selling and differ-entiated merchandise, J. Crew Group Inc. posted strong first-quarter results, with net income more than doubling to $44.7 million and comparable-store sales rising 15 percent.
With the business continuing to be on a roll, the company raised guidance for fiscal 2010 earnings to $2.35 to $2.45 a diluted share, as compared with previous guidance of $2.20 to $2.30 and fiscal 2009 earnings per share of $1.91.
Also on Thursday, J. Crew opened its first bridal store, at 769 Madison Avenue in Manhattan, and launched madewell.com. And recently, J. Crew launched a partnership with the Net-a-porter fashion Web site, giving J. Crew instant presence in 170 countries as well as some indications where the U.S. retailer might consider international expansion in the future.
“We are and will continue to be focused on our mission — to innovate in our design, style, quality and customer service and to invest in our business, our associates and our customers for the long term,” said Millard “Mickey” Drexler, chairman and chief executive officer.
Revenues in the first quarter ended May 1 increased 20 percent to $413.9 million, with store sales up 20 percent to $290 million, and direct sales up 20 percent to $114.4 million.
Gross margin increased to 49 percent of revenues from 42.2 percent. On a diluted share basis, net income was 68 cents, compared with 32 cents in the year-ago period.
“The world changes every day now faster than ever,” Drexler said on a conference call. “If you are doing the same thing today as you did yesterday, somebody has caught up to you.”
Drexler didn’t get specific on the bridal store’s first day in business, but was bullish. “I don’t see why we can’t do this in every major city in America. A bride and her mother will go anywhere, anyplace at any time to get the right dress.…We can only say we are really, really happy about what’s going on there.”
Drexler said J. Crew’s overall success stems from “incredible price advantages over competitors,” as well as quality of design and innovation.
He just visited several small domestic manufacturers with factories in Maine, Massachusetts, Minnesota and Illinois with very limited production, though they could provide products with integrity that aren’t found all over the world. “Day in and day out, our mission is differentiation.…We do not live quarter by quarter. For us, it is all about investing for growth,” he said.
Discussing Madewell, Drexler said after three-and-a-half years of “working our butts off…it’s building a nice reputation, getting a little viral. Overall on balance, I am pleased. There’s always something in any business where you don’t like what’s going on. For the long term, we see a very viable niche.” He said while the division is “really moving in the right direction, we can’t make any promises beyond that.” On the marketing front, Madewell will be supported with packaged stuffers, catalogue inserts, print and online advertising, aggressive e-mail and a sweepstakes to build a customer file. Tracy Gardner, president, who was among the several executives participating in the call, said Madewell could have used “more flow, more newness, more wear-now, and had too much classics. The customers want newness, flow.”
J. Crew operates 220 J. Crew retail stores, 17 Madewell stores, nine Crewcuts stores, the J. Crew catalogue, jcrew.com, madewell.com and 81 outlets.