LOSS SHRINKS AT J.CREW FOR QUARTER
Byline: Thomas J. Ryan
NEW YORK — Aided by robust sales at retail and on the web, J. Crew Group Inc. narrowed its loss in the second quarter ended July 31 to $6.7 million from $11.8 million.
Revenues fell 15.6 percent to $148.7 million from $176.2 million, reflecting the sale of Popular Club Plan to Fingerhut and the discontinuance of Clifford & Wills last year, according to a filing with the Securities and Exchange Commission.
The two businesses accounted for $48.6 million in sales and combined for an operating loss of $4 million in last year’s quarter.
The firm said sales at J. Crew brand operations increased 16.5 percent to $148.7 million from $127.6 million. The Crew brand division cut its operating loss to $1.1 million from $5.1 million, which Crew said was primarily due to improvement at J. Crew direct, which includes the catalog and Jcrew.com.
J. Crew Retail, its full-price concept, saw revenues in the latest quarter grow 23.1 percent to $71.4 million due primarily to store openings. Comparable-store sales climbed 4.2 percent. The company added six stores during the quarter to end with 73.
Revenues of J.Crew Direct rose 14.1 percent to $51 million, boosted by a hike in revenues at Jcrew.com to $9.4 million from $2.8 million. Revenues at the J. Crew catalog eased 0.7 percent to $41.6 million from $41.9 million, although pages circulated increased to 1.7 billion in the quarter from 1.5 million in the 1998 quarter.
At J. Crew Factory division, sales gained 5.8 percent to $25.6 million from $24.2 million.
Gross margins decreased to 41.3 percent of sales from 42.6 percent, but the firm said that excluding Popular Club and Clifford & Wills, margins would have improved from year-ago levels of 39.9 percent. Crew noted that the year-ago period included additional markdowns to dispose of overstocks.
Selling, general and administrative expenses were reduced to 42.6 percent from 47.7 percent, reflecting the exit from the Popular Club and Clifford & Wills operations. The firm said SG&A expenses from the J. Crew brand divisions increased to $63.3 million from $57.6 million as costs related to the increase in the number of stores and higher consulting fees tied to information-technology initiatives offset a $4.9 million decrease in selling expenses. Crew said the selling expenses associated with the ramp up in pages circulated were offset primarily by a decrease in paper costs and efficiencies in the catalog-production process.
Interest expense was trimmed to $9.5 million from $10.2 million.
In the half, Crew’s overall loss was reduced to $14.7 million from $24.6 million. Revenues fell 14.7 percent to $291.7 million from $342 million due to the exit from Popular Club and Clifford & Wills.
J. Crew brand division trimmed its operating loss to $4.9 million from $13.8 million. Revenues jumped 24.6 percent to $291.7 million.
At J. Crew Retail, sales surged 25.9 percent to $136 million, with same-store sales ahead 7.1 percent. J. Crew Direct’s revenues moved up 31.9 percent to $291.7 million. Revenues at Jcrew.com climbed to $19.3 million from $4.2 million; J. Crew mail order increased to $90.4 million from $79 million as a result of an increase in pages circulated to 3.5 billion from 2.9 billion.
At J. Crew Factory, sales increased to $44.6 million from $41.5 million.
Crew is private, but reports result because of public debt sold as a result of its October 1997 majority interest sale to Texas Pacific by the Cinader family.