J.Crew Group reports return to positive comps growth for flagship brand
Ahead of the relaunch of its flagship brand this September, J.Crew Group, Inc. announced the label’s return to positive comps growth for the first time in four years on Tuesday, as sales across the company rose 3% and Madewell continued to experience rapid growth.
The company’s total revenues for the second quarter of fiscal 2018 came to $587.6 million, with comparable sales increasing 5%, following a 5% decline in the prior-year period. Sales at the J.Crew brand fell 5% to $428.9 million. The label did, however, see a long-awaited return to positive comparable growth, reporting a 1% rise, following an 8% decrease in Q2 2017. Madewell, on the other hand, continued to be a bright spot for the company, with sales increasing 29% to $121.7 million and comps rising 28%. Thanks, in part, to its overall sales growth, the company managed to reduce its net loss for Q2 2018 to $6.1 million, compared to $18.5 million in the same period in the previous year. “Our financial results reflect revenue growth, continued expansion in gross margin and a marked shift in expense from significant costs last year that were needed to restructure our business, to planned investments this year in support of our aggressive strategic growth agenda – which we expect will allow us to scale the business and return to bottom line net profitability in the coming year,” said J.Crew CEO Jim Brett in a press release. In the first half of fiscal 2018, the company’s revenues rose 3% to $1.13 billion, while comparable sales increased 3%. Sales at the J.Crew brand fell 6% to $820.7 million, with comps decreasing 3%, while Madewell saw sales shoot up 34% to $237.5 million, reporting an increase in comps of 29%. Operating income for the six-month period totaled $32.4 million, compared with an operating loss of $146.3 million in the prior-year period, while net loss came to $40.0 million, a significant improvement compared to the $139.5 million reported in the same period in the previous year. In a conference call with investors following the release of the results, Brett also provided further details on the J.Crew brand’s imminent relaunch, which is slated for September 10. Among the initiatives intended to turn the ailing label’s fortunes around, the company’s CEO highlighted increased extended sizing, greater model diversity, improved sustainability and the introduction of new sub-brands, a set of strategies which look to be attempting to simultaneously align the brand with new consumer trends and reposition it to better play to its former strengths. J.Crew Group, Inc. currently operates 229 J.Crew stores, 122 Madewell locations and 172 factory stores, as well as three brand-specific e-commerce websites.