Attached files
Exhibit 99.1
| Company Contact: James S. Scully Chief Administrative Officer and Chief Financial Officer (212) 209-8040
Investor Contact: Allison Malkin/Joe Teklits ICR, Inc. (203) 682-8200 |
J.CREW GROUP, INC. ANNOUNCES THIRD QUARTER FISCAL 2010 RESULTS
Third Quarter Revenues Increase 4% to $429.3 million;
Third Quarter Diluted Earnings Per Share of $0.58
New York, NY – November 23, 2010 – J.Crew Group, Inc. [NYSE:JCG] today announced financial results for the three months (third quarter) and nine months (first nine months) ended October 30, 2010. The Company also issued a separate press release today announcing that it has entered into a definitive agreement to be acquired by funds affiliated with TPG Capital and Leonard Green & Partners, L.P.
Third Quarter highlights:
| • | Revenues increased 4% to $429.3 million. Store sales increased 1% to $303.3 million, with comparable store sales decreasing 1%. Comparable store sales increased 8% in the third quarter of fiscal 2009. Direct sales (Internet and Phone) rose 12% to $117.9 million. Direct sales increased 4% to $105.5 million in the third quarter of fiscal 2009. |
| • | Gross margin decreased to 43.5% of revenues from 48.4% of revenues in the third quarter of fiscal 2009. |
| • | Operating income decreased to $64.1 million, or 14.9% of revenues, compared to $75.2 million, or 18.2% of revenues, in the third quarter of fiscal 2009. Operating income reflects a $10.2 million decrease in share-based and incentive compensation compared to the third quarter last year. |
| • | Interest expense of $2.1 million includes a non-cash charge of $1.4 million representing the remaining unamortized deferred financing costs incurred under the term loan. |
| • | Net income was $37.8 million, or $0.58 per diluted share, compared to $43.9 million, or $0.67 per diluted share, in the third quarter of fiscal 2009. |
First Nine Months highlights:
| • | Revenues increased 12% to $1,250.7 million. Store sales increased 11% to $888.2 million, with comparable store sales increasing 8%. Comparable store sales decreased 0.4% in the first nine months of fiscal 2009. Direct sales rose 16% to $334.8 million. Direct sales increased 1% to $289.0 million in the first nine months of fiscal 2009. |
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| • | Gross margin increased to 45.6% of revenues from 44.2% of revenues in the first nine months of fiscal 2009. |
| • | Operating income increased to $198.5 million, or 15.9% of revenues, compared to $142.7 million, or 12.8% of revenues, in the first nine months of fiscal 2009. Operating income reflects a $10.1 million decrease in share-based and incentive compensation compared to the first nine months last year. Operating income in the first nine months of fiscal 2009 includes charges of approximately $5.3 million related to our workforce reduction, underperforming stores and lease termination actions. |
| • | Interest expense of $3.4 million includes a non-cash charge of $1.4 million representing the remaining unamortized deferred financing costs incurred under the term loan. |
| • | Net income was $117.5 million, or $1.78 per diluted share, compared to $82.9 million, or $1.29 per diluted share, in the first nine months of fiscal 2009. |
Balance Sheet highlights as of October 30, 2010:
| • | Cash and cash equivalents were $311.7 million at the end of the third quarter compared to $246.8 million at the end of the third quarter of fiscal 2009. |
| • | Inventories at the end of the quarter were $261.0 million, compared to $223.9 million at the end of the third quarter of fiscal 2009. Inventory per square foot at the end of the quarter increased 14% compared to the end of the third quarter of fiscal 2009. |
| • | On August 31, 2010, the Company made a voluntary prepayment of $49.2 million representing the remaining principal amount outstanding under the term loan. Therefore, there was no debt outstanding at the end of the third quarter compared to $99.5 million at the end of the third quarter of fiscal 2009. |
Guidance
For fiscal 2010 the Company currently expects diluted earnings per share in the range of $2.08 to $2.13, as compared to its previous guidance range of $2.25 to $2.35 and fiscal 2009 diluted earnings per share of $1.91.
Conference Call Information
A listen-only call offering additional comments on third quarter results and this morning’s transaction announcement will be available to all investors starting at 11:00 AM Eastern Time this morning. Callers may listen to this call by dialing (800) 642-1687, or (706) 645-9291 outside the U.S. and Canada, and by referencing conference ID 27737604. The listen-only call will also be webcast on the ‘Investor Relations’ section of the Company’s website at www.jcrew.com. The listen-only call will be available until November 30, 2010.
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About J.Crew Group, Inc.
J.Crew Group, Inc. is a nationally recognized multi-channel retailer of women’s, men’s and children’s apparel, shoes and accessories. As of November 23, 2010, the Company operates 250 retail stores (including 221 J.Crew retail stores, 9 crewcuts and 20 Madewell stores), the J. Crew catalog business, jcrew.com, madewell.com and 85 factory outlet stores. Additionally, certain product, press release and SEC filing information concerning the Company are available at the Company’s website www.jcrew.com.
Forward-Looking Statements:
Certain statements herein are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect the Company’s current expectations or beliefs concerning future events and actual results of operations may differ materially from historical results or current expectations. Any such forward-looking statements are subject to various risks and uncertainties, including the strength of the economy, changes in the overall level of consumer spending or preferences in apparel, our ability to compete with other retailers, the performance of the Company’s products within the prevailing retail environment, our strategy and expansion plans, systems upgrades, reliance on key personnel, trade restrictions, political or financial instability in countries where the Company’s goods are manufactured, postal rate increases, paper and printing costs, availability of suitable store locations at appropriate terms and other factors which are set forth in the Company’s Form 10-K and in all filings with the SEC made by the Company subsequent to the filing of the Form 10-K. The Company does not undertake to publicly update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.
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Exhibit (1)
J. Crew Group, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
| (Amounts in thousands, except percentages and per share data) |
Three Months Ended October 30, 2010 |
Three Months Ended October 31, 2009 |
Nine Months Ended October 30, 2010 |
Nine Months Ended October 31, 2009 |
||||||||||||
| Net sales |
||||||||||||||||
| Stores |
$ | 303,252 | $ | 300,066 | $ | 888,231 | $ | 799,871 | ||||||||
| Direct |
117,940 | 105,480 | 334,806 | 289,012 | ||||||||||||
| 421,192 | 405,546 | 1,223,037 | 1,088,883 | |||||||||||||
| Other |
8,137 | 8,563 | 27,690 | 28,551 | ||||||||||||
| Total Revenues |
429,329 | 414,109 | 1,250,727 | 1,117,434 | ||||||||||||
| Costs of goods sold, buying and occupancy costs |
242,708 | 213,682 | 679,955 | 623,844 | ||||||||||||
| Gross profit |
186,621 | 200,427 | 570,772 | 493,590 | ||||||||||||
| As a percent of revenues |
43.5 | % | 48.4 | % | 45.6 | % | 44.2 | % | ||||||||
| Selling, general and administrative expenses |
122,566 | 125,241 | 372,286 | 350,924 | ||||||||||||
| As a percent of revenues |
28.5 | % | 30.2 | % | 29.8 | % | 31.4 | % | ||||||||
| Operating income |
64,055 | 75,186 | 198,486 | 142,666 | ||||||||||||
| As a percent of revenues |
14.9 | % | 18.2 | % | 15.9 | % | 12.8 | % | ||||||||
| Interest expense, net |
2,127 | 1,052 | 3,386 | 3,207 | ||||||||||||
| Income before income taxes |
61,928 | 74,134 | 195,100 | 139,459 | ||||||||||||
| Provision for income taxes |
24,095 | 30,265 | 77,632 | 56,535 | ||||||||||||
| Net income |
$ | 37,833 | $ | 43,869 | $ | 117,468 | $ | 82,924 | ||||||||
| Income per share: |
||||||||||||||||
| Basic |
$ | 0.60 | $ | 0.70 | $ | 1.85 | $ | 1.33 | ||||||||
| Diluted |
$ | 0.58 | $ | 0.67 | $ | 1.78 | $ | 1.29 | ||||||||
| Weighted average shares outstanding: |
||||||||||||||||
| Basic |
63,512 | 62,775 | 63,330 | 62,406 | ||||||||||||
| Diluted |
65,741 | 65,223 | 65,823 | 64,317 | ||||||||||||
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Exhibit (2)
J. Crew Group, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
| (In thousands) |
October 30, 2010 | January 30, 2010 | October 31, 2009 | |||||||||
| Assets |
||||||||||||
| Current assets: |
||||||||||||
| Cash and cash equivalents |
$ | 311,702 | $ | 298,107 | $ | 246,785 | ||||||
| Inventories |
260,969 | 190,231 | 223,894 | |||||||||
| Prepaid expenses and other current assets |
35,543 | 29,522 | 30,027 | |||||||||
| Prepaid income taxes |
1,930 | 1,455 | — | |||||||||
| Total current assets |
610,144 | 519,315 | 500,706 | |||||||||
| Property and equipment, net |
195,873 | 194,615 | 198,086 | |||||||||
| Other assets |
22,780 | 24,628 | 19,683 | |||||||||
| Total assets |
$ | 828,797 | $ | 738,558 | $ | 718,475 | ||||||
| Liabilities and Stockholders’ equity |
||||||||||||
| Current liabilities: |
||||||||||||
| Accounts payable |
$ | 144,610 | $ | 127,733 | $ | 117,823 | ||||||
| Other current liabilities |
99,026 | 106,652 | 92,022 | |||||||||
| Current portion of long-term debt |
— | — | 1,028 | |||||||||
| Deferred income taxes, net |
958 | 958 | 4,049 | |||||||||
| Total current liabilities |
244,594 | 235,343 | 214,922 | |||||||||
| Long-term debt |
— | 49,229 | 98,458 | |||||||||
| Deferred credits |
67,058 | 67,646 | 69,015 | |||||||||
| Other liabilities |
9,521 | 10,462 | 6,817 | |||||||||
| Stockholders’ equity |
507,624 | 375,878 | 329,263 | |||||||||
| Total liabilities and stockholders’ equity |
$ | 828,797 | $ | 738,558 | $ | 718,475 | ||||||
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Exhibit (3)
Actual and Projected Store Count and Square Footage (Note 1)
| Fiscal 2010 Quarter |
Total stores open at beginning of the quarter |
(Note
2) Number of stores opened during the quarter |
(Note
2) Number of stores closed during the quarter |
Total stores open at end of the quarter |
||||||||||||
|
1st Quarter (Actual) |
321 | 4 | 0 | 325 | ||||||||||||
|
2nd Quarter (Actual) |
325 | 3 | 1 | 327 | ||||||||||||
|
3rd Quarter (Actual) |
327 | 4 | 0 | 331 | ||||||||||||
|
4th Quarter (Projected) |
331 | 4 | 0 | 335 | ||||||||||||
| Fiscal 2010 Quarter |
Total gross square feet at beginning of the quarter |
Gross square feet for stores opened or expanded during the quarter |
Reduction of gross square feet for stores closed or downsized during the quarter |
Total gross square feet at end of the quarter |
||||||||||||
|
1st Quarter (Actual) |
1,958,140 | 20,168 | (615 | ) | 1,977,693 | |||||||||||
|
2nd Quarter (Actual) |
1,977,693 | 12,631 | (7,822 | ) | 1,982,502 | |||||||||||
|
3rd Quarter (Actual) |
1,982,502 | 14,257 | 0 | 1,996,759 | ||||||||||||
|
4th Quarter (Projected) |
1,996,759 | 22,877 | 0 | 2,019,636 | ||||||||||||
Note 1 – Store count and square footage summary excludes three clearance store locations. Above summary includes one factory store and one retail store that are temporarily closed at the time of this announcement.
Note 2 – Actual and Projected number of stores opened and closed during Fiscal 2010 by quarter:
1st Quarter—opened two retail and two factory stores (Actual).
2nd Quarter—opened one retail, one factory and one Madewell store; closed one retail store (Actual).
3rd Quarter—opened two retail, one factory and one Madewell store (Actual).
4th Quarter—plan to open two factory, one factory crewcuts and one Madewell store (Projected).
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