FINANCE

J. Crew bleeds in Q3; ups store closings

BY Marianne Wilson

Even a strong performance by Madewell couldn’t save J. Crew Group in its third quarter as the retailer’s ailing flagship brand continues to drag down the company.

J. Crew’s total revenues decreased 5% to $566.7 million in the quarter ended Oct. 28. Sales plummeted 12% at J.Crew, while sales at Madewell jumped 22% to $107.5 million.

Total same-store sales fell 9% following a decrease of 8% in the year-ago period. Same-store sales fell 12% at J. Crew and rose 13% at Madewell.

The company reported a net loss of $17.6 for the quarter, compared to $7.9 million in the year-ago period. This year’s quarter includes the impact of transformation and transaction costs, the company said.

J. Crew now expects to close 50 stores this year, up from a previous forecast of 30.

“Our goal is to reinvigorate the J.Crew Brand to reflect the America of today and to continue to drive strong momentum in the Madewell Brand,” stated Jim Brett, CEO, who stepped in the top role earlier this year. “During the third quarter of fiscal 2017, we drove gross margin expansion and reduced SG&A by delivering on our expense initiatives. As we solidify longer term strategies, we will continue to leverage our strong brand equity and unique capabilities to expand our reach, accelerate growth and maximize profitability.”

As of November 21, 2017, the company operates 269 J.Crew retail stores, 121 Madewell stores, jcrew.com, jcrewfactory.com, the J.Crew catalog, madewell.com, and 182 factory stores (including 42 J.Crew Mercantile stores).

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R.Mallory says:
Nov-22-2017 09:08 pm

Re: "Our goal is to reinvigorate the J.Crew Brand to reflect the America of today" Problem is the chameleon nature of that statement. That statement coming from a brand which consumers can longer define. Are you career wear? family everyday clothes? for athletes? bridal? tech geeks? "Reflecting" consumers (culture, geo, lifestyle) is a great add on, but the USP of J.Crew is very unclear to consumers... what does the brand do for consumers that no one else does? How is J.Crew different than Gap? What does J.Crew offer in their store that enriches a person's life? Hint: there are ALREADY too many stores for the "America of today." J.Crew can never be a "wow" store if they are only thinking "today." Apple, Amazon, Google, etc all think of today as history; build a brand with a future... and with a USP (unique selling proposition).

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FINANCE

Lowe’s outpaces estimates as hurricane repairs drive sales

BY Marianne Wilson

Lowe’s Companies got a boost from hurricane-related spending as the retailer topped Street estimates and delivered a strong performance in its third quarter.

The home improvement giant reported that its third-quarter sales increased 6.5% to $16.8 billion from $15.7 billion last year. Same-store rose 5.7%. Hurricane-related sales in the quarter were approximately $200 million.

“It is not just natural disasters that are keeping Lowe’s numbers aloft, solid levels of activity in the housing market and a willingness among consumers to invest in the home also continue to drive the DIY market,” commented Neil Saunders, managing Director of GlobalData Retail. “This is benefitting Lowe’s, although not quite as much as it is Home Depot, which remains the destination of choice for many casual improvers and professionals.”

Lowe’s reported net earnings of $872 million and diluted earnings per share of $1.05 for the quarter, compared to earnings of $379 million and earnings per share of $0.43 in the year-ago quarter.

“During the third quarter, we drove traffic in-store and online with compelling messaging and integrated customer experiences,” commented Robert A. Niblock, Lowe’s chairman, president and CEO. “We continue to invest in omnichannel capabilities to enhance value for customers and shareholders. I am also pleased with the progress we’ve made to enhance our product and service offering for the Pro customer, delivering another quarter of comparable sales above the company average.”

For the full year, Lowe’s still expects revenue to increase roughly 5% with comp sales rising 3.5%.

As of Nov. 3, 2017, Lowe’s operated 2,144 stores in the United States, Canada and Mexico.

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Off-pricer Q3 profit tops Street

BY Marianne Wilson

Burlington Stores reported profit in its third quarter that topped analysts’ expectations, but the impact of hurricanes bite into its sales.

Net income increased 38% to $45 million in the quarter ended Oct. 28, or $0.65 per share vs. $0.45 last year. Adjusted net Income increased 34% to $49 million, or $0.70 per share, vs. $0.51 last year. Analysts had expected adjusted net income of $0.66 per share. The increase were driven by a number of factors, including top line growth, gross margin expansion, tight expense control, and share repurchases .

Total sales increased 7.1% to $1.43 billion, just missing estimates. Same-store sales rose 3.1%. The impact of weather-related store closures reduced incremental contribution to total sales results from new and non-comparable sales by $17 million, the company said.

“Our overall 7.1% sales growth, along with our 115 basis point Adjusted EBITDA margin improvement, enabled the Company to drive a 37% increase in adjusted EPS in the third quarter, well ahead of our guidance,” stated Tom Kingsbury, CEO. “I would like to thank our store, supply chain and corporate teams for contributing to these strong results.”

Burlington Stores operated 631 stores as of the end of the third quarter.

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