Thursday, May 28, 2009

J.Crew's First Quarter Fiscal 2009

J.Crew has come out with their First quarter (fiscal 2009) results (click here). Some highlights include:
  • Revenues increased 2% to $345.8 million. Store sales (Retail and Factory) increased 5% to $240.7 million, with comparable store sales decreasing 5%. Comparable store sales increased 2% in the first quarter of fiscal 2008. Direct sales (Internet and Phone) decreased 6% to $95.4 million. Direct sales increased 17% to $100.9 million in the first quarter of fiscal 2008.
  • Gross margin decreased to 42.2% of revenues from 46.9% of revenues in the first quarter of fiscal 2008. The decrease in gross margin is primarily related to increased markdowns as a result of beginning of quarter inventory levels.
  • Operating income decreased 34% to $35.3 million, or 10.2% of revenues, compared to $53.0 million, or 15.6% of revenues, in the first quarter of fiscal 2008. Operating income in the first quarter of fiscal 2009 includes a charge of $1.3 million for severance and related costs associated with our workforce reduction announced in February 2009 and non-cash asset impairment charges of $1.0 million related to underperforming stores.
  • Net income was $20.4 million, or $0.32 per diluted share and includes the impact of severance and asset impairment charges of approximately $0.02. Net income was $30.5 million, or $0.48 per diluted share, in the first quarter of fiscal 2008.
Millard Drexler, J.Crew's Chairman and CEO stated: "We are relatively pleased with our first quarter results and while earnings were lower than last year, we did experience an improved trend in our business. We think it is clear that there is no choice in this environment than to continue to be creative and figure out where the customer is going, not to respond to where he or she has been."

J.Crew is doing much better than its competitors- which I am happy to see! I am also listening to the conference call. Here are some notes so far:
  • Mickey Drexler kept reiterating the point of their commitment to quality & value. (Seriously, he must have mentioned this at least 10 times- no matter what the question. We get it already!) ;)
  • They are happy with the Crewcuts line. They will only open 1 additional Crewcuts store (in NYC) this year. The plan is to mainly keep it direct (online/catalog) as oppose to retail. They are also lowering price points in response to parents concern of costs.
  • Madewell is opening additional stores. The original concept had jeans priced at $98 and above, but they found that with the economy (and competitors), they should start to offer $59.50 and above (with their new line called Madewell37; coming in July).
  • Mickey knows they are less promotional than their competitors (e.g. less private and public sales), but they think this works for them. They also have been offering less markdowns and buying more "shrewdly".
  • J.Crew adjusted prices from being too high. Also, Mickey said that customers have a short term memory- if they see something they love, they buy it.
  • Discounting is a big issue. Mickey doesn't want to have their products discounted and sold somewhere else- that is why they have Factory Stores. (Um... so then why was J.Crew available in Marshalls stores awhile back?)


  1. Mickey knows they are less promotional than their competitors...and it works for them. Glad to hear what he thinks and maybe it truly is working for JCrew. I do know that I have bought less from them in 2009 so far b/c there are other, better promos out there and since they have taken away the educator's discount on sale items I will be shopping even less with JCrew.

    I noticed on the Summer Sale post that others have mentioned skipping the current Summer sale due to this fact as well....

    Time will tell.....

  2. It sounds like they are banking on the customers of Saks, Neimans and other luxury retailers to continue to drop money on full price items at J Crew. I assume that's been working, esp w/the MO factor in effect.

  3. Maybe I just wasn't "in the know", but I recall being happy to get a free shipping code and bought most of my J.Crew at full price. Thanks to this blog I am privy to more offers than in the past. I still buy a few items that I really like at full price, although I am also trying to buy more shrewdly. ;-)

    Totally unrelated to this posting but I am am searching for someone who may be able to help me. I am absolutely in love with J Crew but they don't ship to Australia!

    Is there anyone out there who would be willing to accept my deliveries and post them on to me in Australia - more than happy to pay a fee and more than happy for all packages to be opened and checked thoroughly so you know I'm not some kind of drug courier!

    Packages would come straight from J Crew to you and then you readdress it and send it on to me in Australia.

    It is killing me that I can't buy from the sales - please is there anyone who can help me???

    Jane from Adelaide, Australia

  5. I think I had a great deal to do with those revenues. Lol.

    Their emails really get me almost everytime. I could have bought something 2 days ago, but as soon as I get an email I HAVE to go onto the site to check it out. But thankfully, I am not too crazy about their summer stuff just yet!

  6. And they only want to use their factory stores for markdowns, yet very few factory stores get merchandise from the retail stores! They are all ful of direct to outlet merchandise.

  7. Hi Jane / Style Guide:
    Funny you mentioned that JCrew does not ship to Australia. My husband and I were thinking about moving to Margaret River from CA (fleeing from budget shortfalls and massive homes swallowing up more and more canyons every year) a short while ago and, I must (shamefully) admit that not being able to buy JCrew was a consideration on my end to hold off for now. I contacted them to see if they would ship to Australia, but to no avail. I would like to be of help, am unsure how efficient I would be at readdressing your mail. I could email you to further discuss?

  8. Completely Off-Topic (like, totally):

    The reasoning behind this season's muted tones:

    Ocean Hues

    One of the fashion industry’s strategies to ride out the tough economic climate is on a wave of tranquility, offering up beach shades of ocean blue and sandy neutrals as a dominant color palette for the spring and summer.

    The colors evoke someplace we’d all rather be, and designers and retailers are hoping shoppers will take a new wardrobe with them.

    “Besides the fact that blue is a universally flattering color, I delved into deep aqua and cerulean as escapism. You see those colors, and you think of being on a beautiful island, and we all need a little of that — or a lot,” says designer Peter Som.

    The market is ripe for the change in mood, says stylist Jesse Garza, half of the color-consultancy Visual Therapy, and now is when we crave these colors, providing a contrast to the passing gray winter and grim-looking mud of early spring. Ocean colors give people something to look forward to, he says.

    The article goes on with a quote from Jenna Lyons:

    “We’ve been iconically associated with really bright colors, but we wanted to register a change and feel different,” says J.Crew creative director Jenna Lyons, who conducted a phone interview from inside a store surrounded by mannequins in stone, silver and sky blue. “It feels a little dreamy. ... And they’re colors I don’t have in my wardrobe already.”

  9. Well, I don't have a short term memory when it comes to shopping! I remember what I paid for most every item in my wardrobe and I have a very large one at that!

    Mickey under estimates consumers IMO.

  10. Gata,
    You cannot be serious...moving to another country and experiencing something outside the great US vs shopping at JCrew!!! I love my Crew too but currently I live where JCRew does not ship and I would not give up my experiences in life for things!

    I know a lot of factors go into moving but a chance to live not one to pass up if you can go...

  11. cheaper madewell jeans!!

    love that you're listening to the conference call and reporting back. this is one of my favorite posts so far this month. maybe because i'm a finance geek :D

  12. Genny:
    I agree with you, I guess I am resisting the move a bit, but I think it will eventually happen. We are visiting Margaret River (Australia) next February to figure out things and look for homes... It's what California used to be many many years ago (the good ol' days...). But I will miss JCrew...:(

  13. This blog + Crew Credit Card + Educator discount has significantly increased my spending habits @ Crew. Its getting a bit ridiculous

    on the flip side Jcrew @ Marshalls? Yikes

  14. Gata,
    You will find cute things beyond your imagination where you move. I have found so many unique pieces living overseas...clothes, bags, etc. You can maybe still have a few special JCrew items shipped to friends and family in the states esp. before you come "home" to visit. So many people would love to have the opportunity to live in another country. Embrace your "luck". It will be life changing in so many good ways.

  15. Gata,
    Please email me at - I would love to chat.


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