J. Crew Q4 Profit Falls Despite Sales Gain

Spring style at J. Crew: tile indigo top, LemLem Bara scarf and Collection Audrey suede pumps

Spring style at J. Crew: tile indigo top, LemLem Bara scarf and Collection Audrey suede pumps

New York—J. Crew Group Inc. posted a 42% drop in its fourth quarter profit on Monday, hit by higher costs that offset sales increases.

For the quarter ended Feb. 1, the specialty retailer—which purportedly may soon seek an IPO—reported net income of $5.92 million compared with $10.2 million a year ago.

IPO This Year?

Net revenue rose 7% to $686.2 million. Retail store sales increased 5% to $438.6 million and direct sales rose 10% to $238.1 million. Meanwhile, comparable store sales were up 3% (excluding a calendar shift, comp sales were up 4%).

Gross margin narrowed to 36.8% from 38.4%. Overhead costs rose 4.5%

J. Crew has had a busy month in the spotlight due to reports that its owners, TPG Capital and Leonard Green, had been in talks with Fast Retailing about buying the chain. Those negotiations ended abruptly last week but speculation about a possibly IPO continue.

TPG and Leonard Green bought J. Crew in 2010 in a deal valued at $2.64 billion compared with an estimated valuation now of about $5 billion.

The company also noted that it will incur a refinancing loss of $37 million in its first quarter.


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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