- Revenues increased 6% to $357.6 million. Store sales (Retail and Factory) increased 7% to $259.1 million, with comparable store sales decreasing 5%. Comparable store sales decreased 0.4% in the second quarter of fiscal 2008. Direct sales (Internet and Phone) increased by 6% to $88.2 million. Direct sales increased 12% to $83.2 million in the second quarter of fiscal 2008.
- Gross margin increased to 41.2% of revenues from 41.0% of revenues in the second quarter of fiscal 2008.
- Operating income increased 2% to $32.2 million, or 9.0% of revenues, compared to $31.5 million, or 9.4% of revenues, in the second quarter of fiscal 2008. Operating income in the second quarter of fiscal 2009 includes charges of approximately $2.6 million related to underperforming stores and lease termination actions.
- Operating income in the second quarter of fiscal 2008 included approximately $3.0 million of costs related to our Direct channel systems upgrades.
- Net income was $18.6 million, or $0.29 per diluted share, compared to a net income of $18.1 million, or $0.28 per diluted share, in the second quarter of fiscal 2008.
There is also a conference call today. The following are some highlights that are interesting to share:
- Pleased with better than expected 2nd quarter results
- Madewell is viewed as a long-term opportunity, plans to launch an e-commerce site in 2010
- Mickey believes J.Crew is recognized for quality, design, & service, and is striving to make customers "front and center"
- Mickey stated they are "willing to go above and beyond for our customers"
- Want to develop personal relationships with every customer; Will answer their customers' emails at all hours of the day
- Customers are looking for a unique product they connect to emotionally, at a good value
- Customers come back to regular price when they like the product & merchandise
- J.Crew is testing more with niche mailings to customers (e.g. emails to women, catalogs to men)- will stop at nothing to give quality to customers; So trying to show strength & communicate it to customer (which is done through catalogs and online)
- Invested a lot in marketing (catalogs, mailings, etc.), even advertising in the New York Times, to get customers to come
- Have some must have items for Fall (like Boyfriend Blazer, Shoe-boot, skinny pant, ruffle camis, art tees, and more)
- Conservative with planning inventory levels this season, and will continue to do so
- Won't give numbers of how much is sold during 1st, 2nd, & 3rd markdowns
- Not in the business for markdowns; want to plan, buy, & invest right
- Know there's an expiration date for all the merchandise they buy; for example they expect that after Dec 23rd, everything is worth half than the day before
- People have good memories & will expect good sales during December
What are your thoughts on J.Crew's results and/ or any of the points above? :) What do you think J.Crew should do next?
Well, Mickey has a funny way of taking care of customers if his company insists on discouraging get-togethers to *spend* money, like the KOP meet-up. That post was very discouraging and as a share-holder, I would not be too happy to hear that JC doesn't see the big picture - particularly in this economy..
ReplyDeleteOT: One of my favorite sites, Jezebel.com had a long gush-fest about Crewcuts :):
http://jezebel.com/5347078/jcrews-ovary+busting-child-models-should-come-with-a-warning/gallery/
I wish that we could do the math and determine what percentage of that $357 million represents JCA expenditures.
ReplyDeleteMy guess that there is no incentive to offer discounts like they did last Fall, if J Crew is satisfied with the results.
ReplyDeleteFocus on quality , what an overstatement!
Speaking of quality--I tried on suiting at B&M yesterday but was not ready to purchase at full price--so I bought a t-shirt because the SA was so pleasant and helpful. Just tried it on: the side seams on the tee are twisted and crooked. Gah.
ReplyDeleteI think next quarter results are going to be different. Many of my friends, myself included are trying other brands. I still love Jcrew but they have hit and exceeded my price limit this Fall.
ReplyDeleteHave to agree with others. I may hold out a few months on purchases until the late-fall early winter markdowns happen. Last year people really seemed to get fantastic deals around that time.
ReplyDeleteIn the meantime I will continue to go to the B&M to window shop and try on styles that are worth purchasing later at Final Sale. Given some of the quality issues lately its good to see things in person.
Thanks for sharing Alexis. Looks like they did better than Q2 2008, no easy feat. Their strategy is working so they will likely stay the course with the same level of discounts and promos. Or lack thereof, depending on your view.
ReplyDeleteI have to say that I have always received exceptional customer service from J.Crew. I've read a multitude of reports from others that detail terrible service, but fortunately for me, that has never been the case. Always top notch.
I have to admit I'm not crazy over much J.Crew lately though. A lot of the current offerings are already in my wardrobe in a slightly different incantation and the newly updated version is not enough of a departure to purchase. Maybe it is because I still have plenty of summer items that I didn't even wear because I chose other styles instead. I believe I'm suffering from not only Jenna fatigue, but J.Crew fatigue as well.
I have actually heard of a lot of stores trying to get customers to invest in their regular priced pieces instead of just being a "sale shoppper" - I think its a smart idea. They should lower their price point for basics and intice customers to spend money on the items they love NOW rather than waiting for the sale!
ReplyDeleteI am loving the idea of personal services and really connecting to the customer. I think they do a good job of that with their SAs at the B&M but I think their CS call center needs A LOT of help. I have had rude CS people many times...it's not very welcoming.
I've experienced some disappointments recently, more of "quality issues." I recently noticed holes in one of my corsage tees, painted floral tee, and my space-dyed cardigan (which I've worn 2x). Apparently the thinner materials aren't standing up well to wear.
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ReplyDeleteQuality and service? Really Mickey? I won't buy your sweaters because most of them are so thin that I wind up with a hole in the arm pit. Your last khakis washed up poorly, even when I didn't dry them. And if we must talk about service, how about offending your most loyal customers by cancelling events and not giving them coupons? And I rarely shop at your stores because the SA's are very unhelpful.
ReplyDeleteI will always love the crew, but the arrogance of Mickey's statements are over the top. We're in a freaking recession and I'm not paying overpriced full price or buying low quality items.
Sigh.
ooh la la! Love the new blog design! :)
ReplyDeleteI thought the part about going above and beyond for customers interesting. For the most part, J.Crew really does an excellent job with customer service. However, with the KOP event- someone clearly dropped the ball. :(
ReplyDeleteAppGal: I am happy you like the new layout. :) Chloe inspired me after she updated her (great) blog (the (chloe) conspiracy ) :)
Love the new look! :) And J.Crew does usually have great customer service, although I agree that some of their newer pieces are falling apart prematurely. :/
ReplyDeleteFrom my personal experience yesterday, the call center CS were both rude to me trying to lecture me in what a Final Sale was. SA in B&M are generally nice and helpful.
ReplyDeleteAlso, J. Crew would rather make money by limiting inventory, push for full price purchases and dump even 1st marked down items to "FINAL SALE" (at least for online). In this economic climate I can't afford to buy FP especially when JC price point is relatively higher than other retailers I shop at. If JC pushes for FP purchases to their customers, why don't they offer special discounts on card holders like a lot of other retailers?
Speaking of quality control: my slub cotton and other tees have had holes from just one day of wearing. I've had seams come undone from light washing. Not to mention my capri pants having two strands of thread coming out from thigh area - clearly a defect).
My hubby who works in retail industry said instead of not purchasing what hurts their revenue report would be returning a lot of goods at the end of the month.
So ladies, if you were unhappy about the canceled KOP event you know what you can do to get back at them.
Sorry for the long post.
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ReplyDeleteDid GAP end up letting go of Mickey Drexler? Or did he leave on his own?
ReplyDeleteI would be really curious to get the behind the scenes story on that and why he was let go/walked out?
Cinderella,
ReplyDeleteI am pretty sure they fired him. I could be wrong, but I think I remember reading that in the WSJ and then that JCrew hired him. Let me go check their archives....
I love J Crew I really do but the quality issue is really beginning to turn me away. Take the tortishell belt. Why on earth is there a seam in the not quite middle of the belt? The patent leather my B&M told me was just cut that way and they are all like that. I have seen two now with the seam. My SA showed me the calf hair belts which are the same and look horrible because of it. We are talking shade differences between the two sides on some of them. I complained to customer service on-line where I bought the belt. They told me that my belt should not have had a seam in it. They are overnighting me another one. And yet my B&M who ran out of the belt are telling me otherwise. So the question is will I get a belt with a seam in the patent leather or a solid one? The fact that J Crew is selling flawed belts irritates me to bits. I know that no one will see it but it bothers me. Its a flaw, so why exactly am I paying full price for a flaw?
ReplyDeleteI have had a pair of pants with a twisted inseam sent to me. And sweater with a hole in it. Recently I have taken more items back to J Crew than I have kept.
CS has been wonderful to me so I can't complain but I am starting to stray from J Crew. I worry that the quality will remain sketchy. I am afraid to order anything at this point because it will either be flawed or will be sized wrong.
Sigh.
Can't find the particular article, but yes he was fired. The thought was that he made the merch too trendy for their core customer.
ReplyDeletehttp://nymag.com/nymetro/news/bizfinance/biz/features/10489/
ReplyDeleteHe was fired from the Gap.
the little red bean pancake: I had the same problem with the tortoise belt...but here is what happened to me...the first belt the seam was so damaged the belt felt like it would rip apart at the seam if I wasn't extra, extra careful. When I returned it to my local store, they brought me out another one, also with a seam (and you are right on the money--it shouldn't be there, and if it is why did they place it is such weird part of the belt). That said, the second belt's seam was not "damaged" and felt much more secure and capable of being worn for a long time. I kept the second belt because it can be hidden, and it IS a beautiful item, but I worry as well...I am returning items way more often than I ever used to.
ReplyDeleteI am ordering from other companies more...Boden, Ann Taylor Loft, Banana Republic, and I am seeing high quality items for a lot less money (esp. with the sales some of these places are having).
But J. Crew must know what they are doing...even if it irritates or even angers us, their biggest fans...something must be working. It seems mind-boggling, but there you go...
I hope that your belt comes without the seam but I suspect there will still be one. My SA said every single one in the store had a seam. Good luck!
Such interesting comments today, lots of varied topics and posts. Clearly there are many who are passionate about J.Crew. Although I've been reading this blog for a year, I still find it amazing.
ReplyDeleteI am not one to source even half my wardrobe from J.Crew so it seems I'm in the minority here but I have shopped with them for a few years and often find a few nice things. IMO this is not a very strong season for JC, the styles and colors are rather drab and stale, except for a very select few items. Personally, I look at each piece individually to see how it will work with my current wardrobe and I don't buy into the lifestyle image they present because I need clothes to fit my style, not the other way around.
Regardless, I wanted to pass on this article to my fellow JCAs, just as a cautionary note. Blogging is great fun and entertainment but like everything else online, it can be fraught with hazards that are just now coming to the forefront. In particular, the person whose made the comment about a specific ebayer, please take note. Be aware, blog with care. Free speech should be just that, but when others take exception to what you post, it can be bad news and your anonymity cannot be guaranteed.
http://www.chron.com/disp/story.mpl/editorial/outlook/6587320.html
Keep things in perspective and have a wonderful day.
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ReplyDeletehttp://jcrewaficionada.blogspot.com/2008/08/mickey-drexler-awesome.html
ReplyDeleteHow quickly the tide changes...
Well, I have always been a sales shopper and always will. Mickey won't change my mind and if that is JCrew's new attitude I won't be shopping there as much. I find the quality to be a BIG issue as well so that is my main turn off. What they sell is NOT worth the full price! I guess all good things must come to an end and after being a HUGE obbsessed JCrew fan for 8 years the tide is turing away.
ReplyDeleteI love Boden. I have bought a lot from them for the fall. Really well made items and such fun dark fall colors:)
I think this is a lot of "talk" made to train and make people THINK they have to buy at full price b/c of course that is what Mickey and JCrew want. My hubby works in Marketing and a good friend in Advertising and they have warned me of all kinds of gimmicks and tricks......sure, a few items sell out but they always have in the 10 years I have shopped JCrew. I also see LOTS of items making it to sale that appear to be sold out...and/or backordered suddenly in sale in ALL sizes. I too have always been a sales shopper and will continue to do so regardless of the hype. Cute clothes will always be there and the current "great" must have item will quickly be replaced with the next one.
ReplyDeleteThe Little Red Bean Pancake and Dina: my Tortoise Belt also has the seam and I thought it was defective. I was planning on returning it for a new one without the *defective seam* and am surprised to hear that they are all that way. The Little Red Bean Pancake, I'm interested to hear if your new one comes without the seam...please post about it once it arrives.
ReplyDeleteHexicon - I did the math, and it might surprise you how little of J.Crew's revenue JCAs make up.
ReplyDeleteRegarding Drexler, he may have been fired from the Gap, but he is given most of credit for turning that company around. His firing was abrupt and had a lot to do with company politics.
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ReplyDeleteJTS - I think you are right in that the JCA bloggers make an incorrect assumption that they are the bulk of JCrew's customer base. It cannot be so when you read what people are buying and for how much compared to the sales listed in the quarterly reports. Lots of things bought by JCAs for a fraction of the original price, which is great for the shoppers but they are not the people JCrew is wooing. Sure, there will always be some sales for those who won't buy full price but only because JCrew can't forecast the inventory absolutely perfect on every item.
ReplyDeleteCEOs get fired all the time and a lot of it is political or because a paradigm shift in direction is deemed appropriate. Mickey is the one who elevated Jenna and took JCrew in the new, more stylish direction. CEOs think differently than most people, that is why they are the CEO. It's no surprise that the masses don't see things the same as Mickey.
After doing some research and reading up on Mickey Drexler, I personally believe it had a little more to do with his attitude than hin wanting to change things too drastically for GAP.
ReplyDeleteI am not saying the man is not a genius at what he does....but he does need to get a little more finesse. I think ultimatley that's what led to his demise at GAP. And what may hurt him here at J Crew as well.
JTS--I'd like to know more. Actually, I think it's not going to surprise me--but I'd like to hear your take on the figures. Email me if you prefer at hexicon at yahoo dot com.
ReplyDeleteDoes anyone know when J. Crew began putting a season and year on their clothing labels? I think it's a Mickey-ism, because I can't find a date earlier than Fall 04, even though I have older clothes. The only things lately without dates are the jeans, and I think they're figuring they can keep some around for a long time.
ReplyDeleteI still think J. Crew quality is way, way beyond Banana Republic and ATL, and the designs are much more interesting. I haven't chanced an order from Boden, but after browsing a few catalogs, I'd say I'm sincerely tired of polkadots!
Since Drexler left the Gap, I think their quality has deteriorated. I have a few older items from the Gap that are very well made, but most of the recent stuff is puckery and cheap looking. So, with all my solid cynicism about business rhetoric, I do believe that quality matters to Drexler et al.
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