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J. Crew Group is still having a tough time — but its leadership, including new chief executive officer Jim Brett, is pleased with the progress of its ongoing turnaround.

The retailer on Wednesday reported that its net loss increased to $20.7 million from $8.6 million in the year-ago quarter and that total sales slipped 2 percent.

Even as it sank deeper into the red, executives cited among the highlights greater expense controls and an increase in margins that together pushed up the earnings on an adjusted basis.

They also pointed to lower inventories and the completion last month of the exchange offer involving PIK, or payment in kind notes, that were due in May 2019 and amending the term loan, thereby easing near-term debt obligations and creditor concerns. The financial maneuvers have enabled Brett to take the helm with no significant debt maturities before 2021 and provide breathing room to orchestrate the turnaround strategy.

“Since joining J. Crew in July, I’ve come to a better understanding of how these iconic American brands can be made to play a more meaningful role in our lives,” Brett said Wednesday. “Overall, I am optimistic about the opportunities that lie ahead, particularly when reviewing the strong talent, capabilities and commitment within the organization. The team delivered solid progress on our transformation plan during the second quarter, highlighted by expansion in gross margin and reduced expenses that drove an increase in adjusted EBITDA. And I am confident about evolving our brand strategy to drive long-term profitable growth.”

“We remain optimistic about what lies ahead,” said Michael J. Nicholson, president and chief operating officer, during a conference call just after the company released the second-quarter results.

He added that the retailer was “exploring all strategic opportunities to maximize growth and profitability.”

Nicholson said margins improved due to favorable product costs and leverage in buying and occupancy costs. “We are encouraged by our second-quarter performance. It reflects important progress on our transformation plan.”

The second quarter this year included the impact of transformation and transaction costs, the company said. Adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, increased to $63.1 million from $38.3 million in the second quarter last year.

Total revenues decreased 2 percent to $560.9 million. Comparable company sales fell 5 percent.

By division J. Crew sales decreased 7 percent to $443.1 million, while comparable sales dropped 8 percent, the latest in a string of comp declines the chain has seen over the last few years as it has struggled with the merchandise mix and designs that failed to hit the mark with consumers.

Madewell continued to hold up the group with another strong performance, as sales increased 19 percent to $93.1 million, with comparable sales gaining 11 percent. The group seems to be banking on getting continued growth out of Madewell, as well as the lower-priced Mercantile stores, and cost controls to help it get through retail’s headwinds as the core J. Crew brand remains in repair mode.

Gross margin increased to 38.6 percent from 35.7 percent in the second quarter last year. Selling, general and administrative expenses were $210.1 million, or 37.5 percent of revenues, compared to $196.5 million, or 34.5 percent of revenues in the second quarter last year.

Excluding transformation and transaction costs — incurred in connection with the company’s debt exchange and refinancing — selling, general and administrative expenses were $182.4 million, or 32.5 percent of revenues this year.

Operating income was $2.6 million compared to $6.7 million in the year-ago quarter.

In mid-July, Brett succeeded Millard “Mickey” Drexler as ceo. Brett was president of West Elm, the home furnishings division of Williams-Sonoma Inc. Drexler continues as chairman.

In another executive change disclosed Wednesday, Vincent Zanna, previously senior vice president of finance and treasurer, was promoted to chief financial officer and treasurer. Zanna continues to report to Nicholson, who had held the cfo title.

Last April, J. Crew Group reorganized and streamlined its top management team by eliminating 150 full-time jobs and 100 open positions, primarily from its corporate headquarters, to save approximately $30 million annually.

The group is closing 30 stores this year, or just under 5 percent of the fleet. The company operates 274 J. Crew retail stores, 119 Madewell stores, and 182 factory stores which include 42 J. Crew Mercantile stores. The company also operates jcrew.com, jcrewfactory.com, the J. Crew catalogue, and madewell.com.

While making headway on the cost side of the business, Nicholson said the company is “laser-focused on improving top-line results, particularly at the J. Crew brand.” Overall, “We are continuing to optimize our omnichannel platform and customer experience.”

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