EXHIBIT 99.1
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| | | | Company Contact: James Scully Chief Financial Officer (212) 209-8040 Investor Contact: Allison Malkin/Chad Jacobs/Joe Teklits Integrated Corporate Relations (203) 682-8200 |
J. CREW GROUP, INC. ANNOUNCES FIRST QUARTER FISCAL 2008 RESULTS
First Quarter Revenues Rise 15% to $340.6 million
First Quarter Operating Income Increases 20% to $53.0 million
Revises Guidance for Fiscal 2008
New York, NY – May 29, 2008 – J. Crew Group, Inc. [NYSE:JCG] today announced financial results for the three months ended May 3, 2008 (first quarter fiscal 2008).
First quarter highlights:
| | • | | Revenues increased 15% to $340.6 million. Store sales (Retail and Factory) increased 14% to $229.1 million, with comparable store sales increasing 2%. Comparable store sales increased 8% in the first quarter of fiscal 2007. Direct sales (Internet and Catalog) rose by 17% to $100.9 million. Direct sales increased 31% to $86.6 million in the first quarter of fiscal 2007. |
| | • | | Gross margin increased to 46.9% of revenues from 46.6% of revenues in the first quarter of fiscal 2007. |
| | • | | Operating income increased 20% to $53.0 million, or 15.6% of revenues, compared to $44.4 million, or 14.9% of revenues, in the first quarter of fiscal 2007. |
| | • | | Net income was $30.5 million, or $0.48 per diluted share, compared to $24.6 million, or $0.39 per diluted share, in the first quarter of fiscal 2007. |
Millard Drexler, J. Crew’s Chairman and CEO stated: “I am pleased with our first quarter results. We are on a mission to be the best we can be on quality, style, design and service for our customers. We are dedicated to continuing to always build and invest in our company for the long term.”
Guidance
The Company issued its initial guidance for the second quarter and updated its guidance for fiscal 2008. The Company currently expects second quarter diluted earnings per share in the range of $0.31 to $0.33. For fiscal 2008, the Company currently expects diluted earnings per share in the range of $1.70 to $1.75, as compared to its previous guidance range of $1.85 to $1.87 and fiscal 2007 diluted earnings per share of $1.52. The Company’s revised expectations for fiscal 2008 include comparable store sales growth in the range of flat to low single-digits, Direct sales growth in the high single-digits and net square footage expansion of approximately 11%.
Balance Sheet highlights as of May 3, 2008
| | • | | Inventories at the end of the quarter were $174.5 million, reflecting the impact of 34 net stores opened since the first quarter of fiscal 2007 and 7 stores opened since the end of fiscal 2007 and the timing of inventory receipts as compared to last year’s first quarter. |
| | • | | Long-term debt was reduced to $100.0 million, which reflects the Company’s voluntary principal payments of $25.0 million during the first three months of fiscal 2008. |
Conference Call Information
A conference call to discuss first quarter results is scheduled for today, May 29, 2008, at 4:30 PM Eastern Time. Investors and analysts interested in participating in the call are invited to dial (877) 407-0784 approximately ten minutes prior to the start of the call. The conference call will also be webcast live at www.jcrew.com. A replay of this call will be available until June 6, 2008 and can be accessed by dialing (877) 660-6853 and entering account number 3055 and conference ID number 286170.
About J. Crew Group, Inc.
J. Crew Group, Inc. is a nationally recognized multi-channel retailer of women’s and men’s apparel, shoes and accessories. As of May 29, 2008, the Company operates 206 retail stores (including 4 crewcuts and 8 Madewell stores), the J. Crew catalog business, jcrew.com, and 65 factory outlet stores. Additionally, certain product, press release and SEC filing information concerning the Company are available at the Company’s websitewww.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, 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)
| | | | | | | | |
| (In thousands, except percentages and share data) | | Three Months
Ended
May 3, 2008 | | | Three Months
Ended
May 5, 2007 | |
Net sales | | | | | | | | |
Stores | | $ | 229,109 | | | $ | 201,009 | |
Direct | | | 100,934 | | | | 86,570 | |
| | | | | | | | |
| | | 330,043 | | | | 287,579 | |
Other | | | 10,536 | | | | 9,733 | |
| | | | | | | | |
Total Revenues | | | 340,579 | | | | 297,312 | |
Costs of goods sold, buying and occupancy costs | | | 180,692 | | | | 158,774 | |
| | | | | | | | |
Gross Profit | | | 159,887 | | | | 138,538 | |
As a percent of revenues | | | 46.9 | % | | | 46.6 | % |
Selling, general and administrative expenses | | | 106,841 | | | | 94,165 | |
As a percent of revenues | | | 31.4 | % | | | 31.7 | % |
| | | | | | | | |
Operating income | | | 53,046 | | | | 44,373 | |
As a percent of revenues | | | 15.6 | % | | | 14.9 | % |
Interest expense, net | | | 2,370 | | | | 3,442 | |
| | | | | | | | |
Income before income taxes | | | 50,676 | | | | 40,931 | |
Provision for income taxes | | | 20,175 | | | | 16,282 | |
| | | | | | | | |
Net income | | $ | 30,501 | | | $ | 24,649 | |
| | | | | | | | |
Income per share: | | | | | | | | |
Basic | | $ | 0.50 | | | $ | 0.41 | |
Diluted | | $ | 0.48 | | | $ | 0.39 | |
Weighted average shares outstanding: | | | | | | | | |
Basic | | | 61,192 | | | | 59,731 | |
Diluted | | | 64,076 | | | | 63,248 | |
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Exhibit (2)
J. Crew Group, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
| | | | | | | | | |
(In thousands) | | May 3, 2008 | | February 2, 2008 | | May 5, 2007 |
Assets | | | | | | | | | |
Current assets: | | | | | | | | | |
Cash and cash equivalents | | $ | 121,532 | | $ | 131,510 | | $ | 81,321 |
Inventories | | | 174,493 | | | 158,525 | | | 144,759 |
Prepaid expenses and other current assets | | | 32,850 | | | 33,293 | | | 37,242 |
Refundable income taxes | | | 8,600 | | | 9,794 | | | 8,600 |
| | | | | | | | | |
Total current assets | | | 337,475 | | | 333,122 | | | 271,922 |
Property and equipment, net | | | 174,438 | | | 168,292 | | | 125,208 |
Other assets | | | 33,299 | | | 34,182 | | | 31,792 |
| | | | | | | | | |
Total assets | | $ | 545,212 | | $ | 535,596 | | $ | 428,922 |
| | | | | | | | | |
Liabilities and Stockholders’ equity | | | | | | | | | |
Current liabilities: | | | | | | | | | |
Accounts payable | | $ | 95,657 | | $ | 101,277 | | $ | 66,358 |
Other current liabilities | | | 77,816 | | | 93,796 | | | 65,883 |
Income taxes payable | | | 6,669 | | | — | | | 5,675 |
| | | | | | | | | |
Total current liabilities | | | 180,142 | | | 195,073 | | | 137,916 |
Long-term debt | | | 100,000 | | | 125,000 | | | 175,000 |
Deferred credits | | | 68,388 | | | 67,600 | | | 64,489 |
Other liabilities | | | 7,715 | | | 7,601 | | | 6,435 |
Stockholders’ equity | | | 188,967 | | | 140,322 | | | 45,082 |
| | | | | | | | | |
Total liabilities and stockholders’ equity | | $ | 545,212 | | $ | 535,596 | | $ | 428,922 |
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Exhibit (3)
Actual and Projected Store Count and Square Footage
Fiscal 2008
| | | | | | | | |
Quarter | | Total stores open
at beginning of
the quarter | | Number of stores
opened during
the quarter | | Number of stores
closed during
the quarter | | Total stores
open at end of
the quarter |
1st Quarter (Actual) | | 260 | | 7 | | 0 | | 267 |
2nd Quarter (Projected) | | 267 | | 8 | | 0 | | 275 |
3rd Quarter (Projected) | | 275 | | 14 | | 0 | | 289 |
4th Quarter (Projected) | | 289 | | 14 | | 2 | | 301 |
Fiscal 2008
| | | | | | | | | |
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) | | 1,688,016 | | 38,685 | | (2,261 | ) | | 1,724,440 |
2nd Quarter (Projected) | | 1,724,440 | | 36,313 | | (7,899 | ) | | 1,752,854 |
3rd Quarter (Projected) | | 1,752,854 | | 61,895 | | (4,304 | ) | | 1,810,445 |
4th Quarter (Projected) | | 1,810,445 | | 71,406 | | (12,181 | ) | | 1,869,670 |
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