J.Crew released today their second quarter fiscal results (click here), the following are some interesting financial figures :
- 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?