I doubt that anyone was shocked to hear about losses at J Crew this week -- even while basking in the glow of Michelle Obama's obvious adoration of the company -- it's hard to buck a trend. While J. Crew Group Inc. saw a
$13.5 million loss in the fourth quarter don't count the company out of the growth game this year.
J. Crew posted a net loss of 22 cents a diluted share for the period ended
Jan. 31, compared with net income of $25 million, or 39 cents, in the same
year-ago quarter. Revenues declined 3 percent to $388 million from $399.9
million a year earlier and comp-store sales fell 13 percent. Retail sales slid
3.3 percent to $252 million, while direct sales were down 2.4 percent, to $123
million. Gross margins fell to 27.6 percent of sales from 41.3 percent due to
increased markdowns and greater promotional activity during the quarter. For the year, profits fell 44 percent to $54.1 million, or 85 cents a
share, from $97.1 million, or $1.52 a share, a year ago. Revenues increased 7
percent to $1.4 billion from $1.3 billion last year.
Despite this, the company is planning store openings in select cities tailored to individual locations.
The company is also developing a new identity for its men’s business by opening a variety of men’s-only stores.
J Crew also plans on expanding its bridal business: “A bridal salon store is something
we’re talking about,” says Mickey Drexler, CEO. “We have such strong demand and to reinforce that
with a store in Manhattan would be great. We’re looking uptown and downtown. If
the right location came up, we’d do it.”
The company is working to offer more merchandise below $100. “We’re responding to customer preference,” Drexler said. “That’s
where they’re moving. Our bestsellers are things that are in fact stylish and
fashionable and under 80 or 90 bucks. That’s where the action is right now. The
knit, woven shirt and accessories businesses are doing well.”
The J Crew Collection line, a more exclusive group has worked out well for the company. “It’s very viable now,” Drexler insisted. “It has its place in the
mix.” The first Collection store opened in October on Madison Avenue. “The store
has been incredibly successful,” he said. “Not the least reason is that it’s on
Madison Avenue, surrounded by designer shops that are more expensive. We’re
incredibly pleased with that business. It’s beyond where we thought it would
be.”
Of the Madison Avenue store Drexler said he wouldn't replicate it, but would develop a variation,
“Next month we’re opening a unit in Malibu,
Calif. that will reflect more designer [product] but be tailored for Southern
California. A shop dubbed J. Crew at the Mountain bowed in Aspen and J. Crew at
the Beach in East Hampton is being expanded. These stores are designed to fit in
with their communities. A Crewcuts is opening in New Canaan [Conn.]
shortly.”
J. Crew plans to open 25 stores in 2009, versus 40 in 2008.
Eight of those stores will be Madewell units, J. Crew Group’s lower-priced
casual concept. “Madewell is in tune with the times,” Drexler said. “It’s
fashion-y, casual, great quality and really well priced. But we’re being
cautious. Now’s not the time to get too enthusiastic.”
source: WWD
