Off Madewell’s Momentum, J. Crew Group Narrows Q1 Loss
Madewell is still growing rapidly and is expected to be spun off.
By David Moin on May 29, 2019
J. Crew Group, demonstrating some progress in its turnaround efforts, narrowed its net loss in the first quarter to $16.2 million compared to $33.9 million in the first quarter last year.
Total revenues in the quarter ended May 4 increased 7 percent to $578.5 million. Comparable company sales increased 1 percent.
Total sales at J. Crew brand decreased 4 percent to $376.1 million; comparable sales decreased 1 percent.
Madewell sales increased 15 percent to $132.9 million; comparable sales increased 10 percent.
Adjusted earnings before interest, taxes, depreciation and amortization increased $11.4 million, or 31 percent, to $48.3 million from $36.9 million in the first quarter last year.
“We are encouraged by the meaningful progress we have made in the first quarter, reporting a 31 percent increase in adjusted EBITDA driven by continued momentum at Madewell and the early impact of our swift actions to improve profitability at J. Crew,” said Michael J. Nicholson, interim chief executive officer.
“As we look ahead, we are optimistic about our plans to reignite the J. Crew brand with new designs, assortments and brand expressions, and remain steadfast in our commitment toward achieving Madewell’s long-term growth potential as a leading global brand.”
Selling, general and administrative expenses were $189.8 million, or 32.8 percent of revenues, compared with $200.8 million, or 37.2 percent of revenues in the first quarter last year.
This year includes transformation, transaction and severance costs of $6.4 million and a benefit of $6 million related to the lease termination payment in connection with relocating the headquarters.
Last year includes transformation, transaction and severance costs of $6.5 million.
Excluding these items, selling, general and administrative expenses were $189.4 million, or 32.7 percent of revenues, compared to $194.3 million, or 36 percent of revenues, in the first quarter last year.
Operating income was $22.1 million compared with an operating loss of $0.9 million in the first quarter last year.
Gross margin decreased to 37 percent from 38.3 percent in the first quarter last year.