The following is an article found on Business Week Online (click here for the link):Analyst upgrades J. Crew as sales seen improving
NEW YORK | July 7, 2008
An analyst on Thursday upgraded J. Crew Group Inc. to "Hold" from "Sell" and said the apparel retailer has likely issued overly cautious second-quarter guidance. Since its first-quarter earning report on May 29, shares have fallen 32 percent, partly due to a disappointing second-quarter outlook.
However, Citi Investment Research analyst Kimberly Greenberger said there is upside potential to the guidance."We believe management's guidance is overly cautious and the second quarter is likely running inline to slightly better than expected," Greenberger wrote in a note to investors.
June sales likely improved from April and May, she added. "If improving June sales continues into July, we believe there could be upside to management's cautious second-quarter earnings per share guidance," she wrote.
She upgraded the New York company to "Hold" from "Sell." Shares rose 58 cents to $32.67 during midday trading.
This article paints a positive outlook for J.Crew's immediate future (and as a stock holder, I am thrilled about that!) However, I have to wonder if the recent (and unforeseen) system upgrade/ website fiasco is going to impact J.Crew's sales enough to hurt their stock price...
I wonder if the "overly cautious" second quarter projections were because mgmt knew they were going to take a hit with the website. although I'm sure it's going to be a worse hit then they imagined!
ReplyDelete"If improving June sales continues into July..."
ReplyDeleteWell the website went down June 28 and isn't really back, so I'm guessing that might put a damper on some of the projected improving sales. But then again, I really don't know. I just think that it would have to impact their sales though...
Alexis: I think the second- and third- quarter earning reports will be really interesting this year. I'd love to hear more about them when they come out. Hopefully J.Crew's website will be back to normal (or at least normal loading speeds) sometime soon, and stockholders and aficionadas can all rejoice! :)
I still can't help but think that sales went down in April and May due to the whole removal of the FreeShip/No Min coupons...does anyone remember an exact date that happened? I think it was in the beginning of April...I think the only way they will have improvement for July, is if the in-store sales increase due to the website fiasco...although it seems like they must be spending LOADS of money in overtime, gift cards, etc., trying to keep customers.
ReplyDeleteTEST by FFM to see if Name/URL is easy to use and successful. :)
ReplyDeleteOk...so the test worked...to use the Name/URL, all you have to do is type in a name and enter...nothing to it. :)
ReplyDeleteOkay, I posted a comment on another place regarding returns/sale items that J Crew currently has in their inventory. Based on what I gather from the CS last night, I don't think we will see any updated sale items for awhile. J Crew is more focused on their website selling current items, shipping out what customers have purchased recently, hoping that the new Fall items will work within the next two weeks and then I think IT will eventually fix the Sale area so all the return/inventory items can be sold. That's how I think their order of priority is going to be.
ReplyDeleteThink their website performance has anything to do with their downgrade? Since last Monday they have either been offline altogether or SLOW.
ReplyDeleteInspired by FFM: testing - if this works, anon no more!
ReplyDelete-- Vivian
It worked Vivian!!!!! Gone are your Anonymous days...YAY!!!! :)
ReplyDeleteI think J Crew is having financial problems. They probably over ordered on spring/Summer merchandise and need to unload them. The web site problems may be a hoax to cover this and sell off their inventory. They were undoubtedly more cautious in their Fall/Winter inventory. All retail is suffering because of high fuel prices. This affects everything and most consumer's incomes do not go up with rising fuel costs. The average consumer cuts the frills, even those with plenty of $$$$.
ReplyDeleteI agree with Kirbydog. JCrew stock price will probably remain volatile due to the slowing economy and rising energy costs.
ReplyDeleteMaybe the problem lies in J.Crew losing sight of its target market. This article is from February 2007 and talks of J.Crew's ability to raise prices and not lose customers. But I wonder if, now that people don't have as much discretionary income, if they're a little less willing to spend $25 on a plain, solid-colored tank top (I know I have to think twice about it!) And as you guys have mentioned, they have their "high-end" lines they've been trying to push as of late - seriously, who are they trying to sell to? I'd like to think I'm in that target demographic, but when I see those prices go up to the extent that they have - but the quality not necessarily going up with it - I'm just not so sure...
ReplyDeleteAlso - I'd like to know how it is that GAP and Banana Republic are able to offer free shipping (on any amount) to their best customers - and ship UPS nonetheless. But J.Crew can charge exorbitant amounts and ship the items USPS? There has to be a catch in there somewhere - someone's got to be profiting off of it somewhere (I'm cynical, I know). AND the gall to make "final sale items" un-returnable!? No one else does that!
Okay, just going off on a tangent now... But to keep happy customers, wouldn't you think you'd do more to, um, keep them happy? Just sayin'...
ratsonparade: I mentioned in an earlier blog about J Crew's shipping fees. I think J Crew packs their clothing with much emphasis on presentation (most of their clothing comes in a box with tissue wrapping). if an item comes Final sale, it's more or less packed in a brown bad. BR, ON and Gap is mostly packed in plastic shipping bags, and it takes about a week to receive an order. I don't mind paying less for shipping (free would be great) but J Crew is particular about shipping, so I don't think their going to change their delivery system anytime soon. Plus, someone posted that J Crew does make money off their delivery fees.
ReplyDeleteOops, bad=bag
ReplyDeleteI am sure J.Crew is in the same boat as everyone else during these very tough economic times, and from what I read, their stock only got upgraded because they overestimated how poor sales would be. I can't imagine this past two week's worth of disaster - i.e., the website launch - won't make a noticable impact on profits.
ReplyDeleteIt's of key importance J.Crew get their site and shipping running smoothly before fall. But on the whole, until the dollar recovers (election can't get here fast enough, as far as I'm concerned), this whole country is in a bad slide. Thanks Bush!
RatsOnParade: i wonder how GAP is able to do the free shipping thing too...i have a GAP silver card and free shipping on any amount is great....i use it mostly for old navy and sometimes GAP for my 3 1/2 year old.
ReplyDeletei don't know what's up with jcrew shipping...i mean, their packaging is nicer, everything wrapped in tissue with the snazzy sticker and nice box...which i actually appreciate especially when ordering the nicer items. and i usually get jcrew stuff faster...i guess that's what makes their shipping so much $$$? but sometimes i just get the bag (like websuzy said maybe just for sale stuff)...but you still pay the same high shipping fees...i don't get it...
Since webbysuzy mentioned it I just *had* to look it up:
ReplyDeletePerhaps I'm reading this incorrectly, but doesn't it sound like they are, indeed, profiting from the increase in shipping charges?
"Other revenues, which consist primarily of shipping and handling fees and royalties, increased to $10.6 million in the first quarter of fiscal 2008 from $9.7 million in the comparable period last year. The increase resulted primarily from an increase in shipping and handling fees attributable to the increase in Direct sales."
And that's just for Q1 of 2008.
Ratsonparade: I agree with you especially since they clearly state "The increase resulted primarily from an increase in shipping and handling fees attributable to the increase in Direct sales."
ReplyDeleteKirbydog: Your comment about JCrew using the premature launch of the website as a distraction could be just that, or as an excuse for poor sales. (But are they really doing that bad in sales? I thought they were rolling out the Madewell site at the end of July?)
Does anyone know if they are still offering the 25% discount in stores?
ReplyDeleteAs of yesterday the Towson, MD store was still offering 25% off.
ReplyDeleteJust thought I'd share. An item (Frances Blouse) that I ordered June 26 (before the website went under like the Titanic)just shipped out to me today...today is my birthday and I wanted to wear it but at least it shipped out on my birthday!
ReplyDeleteAnon @5:17: They are still have the extra 25% off at my store in Orlando...the associate said they don't have a specific end date, but she thinks it will last a couple more weeks, until they get there Fall Merchandise in.
ReplyDeleteFYI FOR ALL YOU WHO BUY J.CREW MENSWEAR: The store in Orlando has an extra 40% off in the Men's section...maybe you should check with the stores where you live to see if they are doing the same thing. :)
Anonym @ 519: Happy Birthday! and congrats on the blouse. What color is the Frances Blouse?
ReplyDeleteAnon @5:19: HAPPY BIRTHDAY!!!! I am really sorry you didn't get your blouse! Hopefully by the end of the week, though...hope your Birthday is a GREAT one, despite J.Crew's fiasco.
ReplyDeleteAlright rach: You keep posting like a milisecond right before I do, and with the exact same info...how weird is that?
ReplyDeleteFFM: oops-looks like I broke the chain by posting somewhere else. I have to read & respond when I can. My DH frowns upon this site as much as the JCrew boxes! lol
ReplyDeleteanon@5:17: my store (Seattle) also still had the addt'l 25% off of women's sale going as of Sunday when I was in.
ReplyDeleteNY Soho-still has a large inventoy of 25% off and took of educator discount on top of that. I got bootcut jeans for $19...nice!
ReplyDeleteGarden State in NJ - totally revamped for the fall and had things I have not seen anywhere else. Velvet blazers, shimmery skirts...shoes and other items not seen on the site or another store ( i've been to 5 others!)
oooh - what did the velvet blazers look like? Did they have the pretty ruffle stand up collar like last year's bella?
ReplyDeleteI always get so excited to see the new stuff. Even with this web disaster in mind. Fall is my favorite season at J.Crew!
Speaking of fall, I should be getting my latest rewards card from my jcrew cc, and sometimes they come with a new season preview booklet...
The site is down again:(
ReplyDeleteAre they really using the USPS? I placed an order on 7/3, checked the website two days ago, and noticed a UPS tracking number. I ended up calling J Crew because when I copied and pasted the tracking number into the UPS website, the status of the order was delivered. The delivery date was 5/30/07, with a delivery location of Philadelphia. I don't live in PA, and we're in 2008. J Crew told me to call back because their system was down, and they would have to research it. I called back and the CS told me UPS was reusing an old tracking number. In order to track my order, I need to click on View package progress. I did this, and it still said delivered to Philadelphia. Maybe UPS is having a website problem too? Anyway, I'm pleased to say the order arrived today.
ReplyDeleteMy order from 7/2, however, has not shipped, doesn't have a tracking number, and makes special appearances on the website. Sometimes it's there. Sometimes it isn't.
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ReplyDeleteWebbysuzy: I think you are right that we won't be seeing any updated sale items online for awhile.
ReplyDeleteKirbydog: I don't know if the website's failure is a hoax or not- but it is definitely something that will hurt them.
Ratsonparade: Your article about its target market is interesting. Thanks for sharing! :) I also agree that J.Crew should follow Gap/BR and offer cardmembers free shipping. Those shipping rates of the Crew are quite inflated.
Webbysuzy: I know what you mean about presentation. I often think that I would pass on the tissue paper and that little piece of paper letting me know what wonderful services J.Crew offers me if I could pay less in shipping. ;)
Anonymous at 5:19PM: HAPPY BIRTHDAY!!! You will love your Frances Blouse (when you get it). :)
FabulousFloridaMommy: Thanks for the heads up on the discount on mens clothes in the Orlando store. I wish my local store carried 40% (but for Womens sale items.) ;)
St: I hope all your orders make it. :)
alexis: Their website was down, but it's up running again. I was thinking maybe every time their website went down, that's when they upload new stock. Wishful thinking?
ReplyDeleteWhen I purchase something at the b&m J Crew, I would tell the salesclerk "Don't worry about the tissue paper. Save some trees." I just fold my purchase and place it inside my backpack.
Webbysuzy: I also thought that J.Crew would have new stock after each time the website was down during the week! :)
ReplyDeleteI think its great that you tell them not to bother tissue wrapping. Every time I think of doing that they are already half way through the process. And whats up with every receipt needing its own envelope? ;)
anon@5:17 - The Houston, TX store had it as well as of today. An associate told me that my particular J.Crew store will be stocking the new fall items on June 26th, and that the additional sale will likely end then.
ReplyDeleteThe velvet blazers were really beautiful. No ruffle...but jewel like colors that make you want the weather cold just to wear it. :-)
ReplyDeleteHi All! Reader since this site's inception, first time poster.
ReplyDeleteIn regards to RatsOnParade's remark about the high-end collection, J Crew is definitely better at it than Banana Republic. If you check out the BR sale section, there is an abundance of marked down Monogram stuff selling along with the rest of the regular stuff. Their marked down price point is exactly the same! It was ridiculous looking at them. Who would buy them at full price and then watch them depreciate in value spontaneously?
With J.Crew, the management is shrewd enough to withhold the sale stuff for a while before reintroducing them on the website. There's a "cooling period". I never see repeated mark downs on the same item over a short period of time. In this aspect, I think that people would be more inclined to buy from J.Crew's high-end collection, which benefits from the effort to cultivate an aura of exclusivity.
Until the November election, I don't think the outlook of the economic situation will change. People will buy less overall (hopefully more sale stuff for us!)
Thank you for all the tips for the past few months. They've been great!
Patrick
Sorry, this has nothing to do with stock -
ReplyDeleteAlexis, did you say that you're eligible for the educator's discount as a teaching assistant? I know professors are eligible...do you think postdocs would be eligible, with a university ID?
Also, it looks like the FREESHIP coupon has been removed from the banner at the top of the website. No clue whether it still works, since the checkout button isn't working. It would be pretty lame if they took away FREESHIP when the website functionality is still hit or miss.
Hi, My Frances Blouse is the cherry blossom one:) Thanks for all the birthday wishes:)
ReplyDeleteFREESHIP worked on a "mock checkout" this morning 7/9/08, even though the banner is gone. :)
ReplyDeletepatrick (cool, another guy posting):
ReplyDeletei agree with you about jcrew being better at marketing their high-end items than BR - and i think that most of BR's women's clothing has become very stuffy anyway, especially their monogram items.
in my opinion, most of jcrew's "collection" items come across as fabulous, not stuffy even though i think they are still a tad over priced ;) and as you said, jcrew "cultivate(s) an aura of exclusivity". BR seems to always have an endless supply of merchandise (or people are just not buying it:)) as it gets cheaper and cheaper while jcrew seems to sell out quickly of many of their items, probably due to their making a limited supply as well as being better styles...if i look at something at BR, i know it will be around for a while and will go on sale, but with jcrew items, i tend to want to buy items at full price because i'm afraid they will sell out/be waitlisted quickly (although that hasn't been the case as much lately due to the economy i guess :0)....
i've said this in another post, but i think that GAP/BR/ON went downhill fast when their CEO left...and he went to JCrew...and that's when JCrew got even better than it already was...their shipping prices/policies are still a little wacky though...just my 2 cents :)
Whenever I look at the prices of the items, I wonder how this affects the volume of their sales. On the one hand, their per-profit per item is higher, but if they aren't selling as much, it seems like it would amount to about the same.
ReplyDeleteThen I read this article and it pointed out something interesting that I didn't realize -- US retail sales amounts are calculated based on what American companies sell, not who buys them and where they're located. So people buying from American companies abroad are counted as part of American retail sales. And even the international offices of retail companies, if located in another country but manned mostly by US citizens, are counted towards American retail sales.
I think that's pretty interesting because it reminds me of how there is the J.Crew collection, with really pricey items. I wondered how people, with the state of the economy the way it is, could really justify these kinds of prices. Then I thought ... what if it isn't Americans who are buying these items but people overseas? If you're from Europe, anything from J.Crew would be half the price right off the bat, a total bargain!
So this really long spiel is to say that I thought it would be interesting to see who are buying what items! Perhaps J.Crew does have a high-end market and it's all from people not in the US!
I enjoyed the article on real estate in the Hamptons in the latest Vanity Fair (gossip girl, etc cover). I was fascinated to know that Mickey Drexler has a $27M house and based on that I think J. Crew is going to be just fine :-p
ReplyDelete