J.Crew shares rise on analyst upgradeBy Associated Press
January 23, 3008
Shares of J.Crew Group Inc. rose on Friday, as an analyst said the company is making progress with inventory and expense reductions and upgraded the company to "Equal weight" from "Underweight." Shares rose 30 cents, or 2.9 percent, to end at $10.56.
Earlier this month, J.Crew Group (nyse: JCG) Inc. said that weaker-than-anticipated sales would lead the apparel retailer to report a fourth-quarter loss. The New York company said sales were hurt by an aggressive effort to clear fall and holiday inventory during the fourth quarter.
"Sales remain under considerable pressure, but we think inventory and expense reductions move the risk/reward back to neutral ground," said Barclays Capital analyst Jeff Black.
He raised his estimate for the year ending in January 2010 to 57 cents per share from 40 cents per share - while analysts polled by Thomson Reuters, on average, predict a profit of 58 cents per share.
"Heavier clearance and a January sample sale should help J.Crew bring inventory in-line with sales by the third quarter, though we expect weak margins across the first half of 2009," he said. "All in all, we believe management is doing the right things, the long-term square footage opportunity is attractive and our 2009 estimate is no longer an outlier."
First, I am thrilled about the positive news. Although, I am cautiously optimistic about it considering these economic times. Second, I find it interesting that the Sample Sale was mentioned in helping J.Crew with their inventory levels. When I attended the event, I saw lots of people but they were *not* purchasing lots of merchandise. Now that the sale has ended, I am curious how "well" it did. ;)
What are your thoughts on the article? Do you think the positive direction described will continue for the rest of 2009? Would you consider buying J.Crew stock right now? ;)
If I could afford stock at this moment, I would buy. But I don't know much about the stock market, so my opinion isn't exactly the best.
ReplyDeleteIt is nice to hear the good news but I would be very cautious...there is a LONG way to go before things truly pick up. There have been sooo many BIG companies letting people go in the past week. HUGE downsizing...this will impact sales...so I wouldn't get to "excited" yet. Also, like Alexis, mentioned...I don't think the sample sale waS that great of a hit and so don't count those sales yet...positive prediction a little too early. I guess I am being realistic.
ReplyDeleteIt is positive news, I wonder what the "Obama" effect had on the outlook?
ReplyDeleteAnother point that I found interesting was about the inventory. I wonder if they cancelled some Spring merchandise orders, even though they were not supposed to be adjusted until later in the year.
I don't think one woman can save JCrew. That is just wishful (and a bit crazy) thinking. Esp. when the items people want are not even available. This coming fall/winter they will be but as we all know the American people want the items NOW not later. The want will have worn off by then.
ReplyDeleteI have quite a lot of J Crew stock, which is down 80% from where I bought it. I hope it does rise...then maybe I can actually buy some of the clothes! Or maybe I should buy some of the clothes to make the stock rise.......hmmmmmm. Let me think about this one.
ReplyDeleteThis comment has been removed by the author.
ReplyDeletehehh hee as a shareholder, I hope so. But I'm not holding my breath :)
ReplyDeleteMainly b/c of this economy in general.
anon 6:38: I did not say one women can save J Crew, I just said it sure did not hurt that is all, they did get some free publicity, and it did create traffic to their website, even though the items were not available, people could have purchased other items.
ReplyDeleteCasual crew,
ReplyDeleteI was not speaking directly to you. Sorry if it appeared that way. Just read a news article on the topic that one women cannot save JCrew...that is all....
I am willing to bet J.Crew has canceled some spring inventory after the glut of Fall/Winter FS. The deep discounts really hurt the brand's image and when they are selling some things for 1/4 or 1/5 the original price, the margins are wafer thin, if they are not just breaking even.
ReplyDeleteWe've seen the travel trench and Sanur dress sold out in specific colors and sizes already, although they were likely resort items but popular items often have a backorder date and these do not.
As one who purchases full price 90% of the time, I would be happy to see J.Crew adjust their inventory so they can sell the right amount at full price and have fewer items deeply discounted. It would be better for their shareholders and the long-term health of the company overall.
anon 7:33: True, is J Crew in that much trouble, meaning more than other retailers in this economic downturn? I always thought they would fare better than others.
ReplyDeleteAnony@7:40
ReplyDeleteI think the deep sales hurting JCrew is a bunch of crap. JCrew has been having big, deep discount sales for years. In the past 6 1/2 years I would buy pants at stores for $19.99. In fact, I own about 40 pairs of JCrew pants and I didn't spend more than $19-40 on each pair including lined wool and tuxedo pants for women.
I only buy on sale so to me this is a bunch of sales, economy baloney.
Anony@7:40
ReplyDeleteWell, if JCrew sold most of their items at full price why do I have a closet full of ALL sale clothes from the past 8 years? I mean, 90% of my wardrobe is JCrew...but all on sale. And, well, I have a HUGE closet (made a bedroom into one)
Just sign me,
bargain shopper in MN
casual-jcrew,
ReplyDeleteIt is just my opinion but no retailer is safe in this economy. Burberry just closed a plant in the UK and hundreds of workers are without jobs.
JCrew was moving upscale but upscale retailers are actually struggling A LOT right now.
Just as long as JCrew doesn't get a big head and think they are immune they should be OK.
Last two anons - Of course, J Crew has always had deep discount sales. The difference is the number of items included in those sales. Often the sales were deeply discounted at the very end of the season and the pickings were much slimmer. As long time sales shoppers with J Crew you experienced this personally, as I, a long time sales shopper did too. This year almost all items were discounted quickly and while inventory was still quite high. I think you can realize how this affrects the bottom line. Discounts are always planned for, but a season like this hurts a retailer. Please think of this from a business perspective and not a personal perspective. You will be able to understand the analysts indications much more easily.
ReplyDeleteLast two anons - Of course, J Crew has always had deep discount sales. The difference is the number of items included in those sales. Often the sales were deeply discounted at the very end of the season and the pickings were much slimmer. As long time sales shoppers with J Crew you experienced this personally, as I, a long time sales shopper did too. This year almost all items were discounted quickly and while inventory was still quite high. I think you can realize how this affrects the bottom line. Discounts are always planned for, but a season like this hurts a retailer. Please think of this from a business perspective and not a personal perspective. You will be able to understand the analysts indications much more easily.
ReplyDeleteI think that if J.Crew doesn't fix the website and shipping problems, they could be in for serious trouble in the future. Since they don't offer a good majority of the merchandise in stores, customers have no choice but to order online for specific pieces they want or need. Since the website and the warehouse can't function correctly it promises to be a huge loss for them.
ReplyDeleteFFM,
ReplyDeleteI agree. The website has very BIG problems that continue to go unaddressed. New customers drawn to JCrew will not put up with the issues esp. when other companies offer better customer service.
Also, quality checks on return garments need to be greatly improved. Another pet peeve of mine with JCrew.
Anon @ 9:56 - thank you for your post. You said what I meant, although I couldn't articulate it so well at that time, it was 5:40 am for me.
ReplyDeleteAnony 7:40
Just like long distance running, it takes time to get where you need or want to be. J.Crew is going through the same process, working towards their goals. They are definitely not there yet, but when Forbes and others report soem good news I think J.Crew is making progress.
ReplyDeleteThe downturn in the economy is definitely working against them, but I expect them to survive thsi period and emerge stronger.
Tines like this create a survival of the fitest; especially with companies like J.Crew. I think they'll come out ahead.