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.