J. Crew Group Inc. is prepping a cost-savings program in the wake of a mediocre second-quarter performance.
The specialty apparel retailer reported essentially flat total revenues of $588.8 million, while same-store sales declined 1% from the prior-year period. Net loss grew to $44.2 million compared to $6.1 million in the second quarter the previous year. J. Crew said net loss during fiscal 2019 and 2018 were impacted by transaction, transformation and severance costs and a benefit related to the lease termination payment.
One bright spot was performance of the company’s Madewell subsidiary, which it launched in 2006 as a separate, more casual and denim-based brand. Madewell sales increased 15% to $139.7 million from $121.6 million, and Madewell same-store sales rose 10%. J. Crew has announced it will spin off Madewell as a public company.
During the quarter, J. Crew launched a multi-year cost-optimization program, which the retailer expects to generate cost savings of approximately $50 million. This program is expected to reduce overall costs and enable the company to move faster in the execution of its strategy to maximize value, position for long-term growth, and deleverage and strengthen its balance sheet.
"Our second-quarter results reflect our ongoing commitment to returning J. Crew to profitable growth over time,” said Michael J. Nicholson, interim CEO, J. Crew. “Our work to reignite the J. Crew brand with new designs, assortments, and brand expressions is well underway and we remain focused on advancing our digital transformation and elevating customer engagement across channels.”