J.Crew swings to Q4 loss; taking ‘immediate’ action to reverse course
J.Crew Group struggled in the fourth quarter amid inventory write-downs and strategies that ultimately proved unsuccessful.
The apparel retailer reported a net loss of $74.4 million for the quarter ended Feb. 2, compared with net income of $34.7 million in year-ago period. The fourth quarter loss reflects the impact of excess inventory write-downs, the company said.
Total revenues increased 3% to $733.8 million. Total same-store sales increased 9% following a decrease of 3% in the year-ago period.
By division, J.Crew sales decreased 4% to $527.9 million. J.Crew comparable sales increased 6% following a decrease of 7% last year. Madewell sales increased 16% to $157.9 million. Madewell comparable sales increased 22% following an increase of 19% last year.
For the full year, total revenues increased 5% to $2.48 billion. Comparable company sales increased 6%. J.Crew sales decreased 4% to $1.77 billion; comparable sales increased 2%. Madewell sales increased 26% to $529.2 million; comparable sales increased 25%.
J. Crew is still on the hunt for a new chief executive. In November, Jim Brett abruptly stepped down as CEO after only 16 months on the job. Reports said Brett was forced out over disagreements with the board on strategy. While the CEO search is underway, the company is being managed by an “office of the CEO” made up of four senior J. Crew executives.
"The J.Crew brand delivered disappointing results in 2018 as many new strategies we deployed were ultimately not successful and negatively impacted our financial performance, while Madewell generated another year of record results, accelerating its path to becoming a $1 billion global brand,” said Michael J. Nicholson, president and COO and member of the office of the CEO. "Despite continued strong performance at Madewell, we believe our 2018 results do not reflect the opportunity inherent in the collective strength of our iconic brands.”
Nicholson said the company is taking “immediate and decisive action” to refocus its strategy and improve performance in 2019, with the goal of returning J.Crew to profitability and sustaining momentum at Madewell.
“Finally, we remain highly focused on managing inventory with increased discipline while aggressively optimizing expenses,” he said.
As of March 20, 2019, the company had 202 J.Crew retail stores, 131 Madewell stores, and 174 factory stores (including 42 J.Crew Mercantile stores).