J. Crew Q3 Profit Up 6.8%, Sales Up 11%

Cashmere for holiday at J. Crew

Cashmere for holiday at J. Crew

New York—J. Crew reported Wednesday afternoon that its third quarter profit rose 6.8% on sales increases despite a decrease in gross margin.

For the quarter ended Nov. 2, J. Crew posted net income of $35.4 million compared with income of $33.2 million in the third quarter last year.

Net revenue was up 11% to $618.8 million while comparable company sales increased 4%. When realigning last year to be consistent with the current year retail calendar, comparable company sales increased 5% on top of an increase of 10% in the third quarter last year.

Sales at its stores increased 7% to $420.2 million on top of an increase of 17% in the third quarter last year. Direct-sales, which includes J. Crew Factory and Madewell direct businesses, increased 21% on top of a 13% increase last year.

Q4 ‘Highly Promotional’

Gross margin fell to 43.9% from 47.3% as input costs rose 19%.

Selling, general and administrative expenses were flat to last year at $188.6 million, or 30.5% of revenues compared to 33.9% of revenues in the third quarter last year. This year reflects a decrease of $7 million in share-based and incentive compensation.

Projections and estimates weren’t given since J. Crew was taken private in March 2011 in a $3 billion acquisition by private equity firms including TPG Capital and Leonard Green & Partners.

But on a conference call with analysts, Libby Wadle, president of J. Crew brand, said fourth quarter appears to be “highly promotional” as expected.

“But I think we are participating to the extent that we’re comfortable, and so far we’ve been pleased with our results. But as it has been–honestly all year, it’s been a promotional environment out there and we expect it will continue,” Wadle said.


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Jeff Prine

Jeff Prine, Editor at Large, Accessories Magazine
Jeff returns as a regular contributor to Accessories magazine. Initially Jeff worked as senior editor at Accessories more than 20 years ago and his love of the industry has followed him until present. Since his tenure here, Jeff has continued to report jewelry, watch and other luxury goods trends as executive editor at Modern Jeweler magazine, fashion director at Lustre, and as contributor on products and trends for consumer and trade publications and websites. In addition to his editorial experience, Jeff also served as an adjunct instructor for accessories merchandising at Fashion Institute of Technology. jeffp@busjour.com