J.Crew Group, Inc. Declares 4th Quarter And Fiscal 2K18 Results

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 J.Crew Group, Inc. (the “Company”) recently declared financial results for the 3 months and fiscal year finished February 2, 2K19. The results of the 3 months and fiscal year finished February 3, 2K18 contain an additional week, and reflect 14 and 53 week periods, respectively. Net sales generated in the 53rdweek of fiscal 2K17 are not included in comparable sales.

4th Quarter highlights:

  1. Whole revenues raised 3 percent to $733.8M. Comparable company sales raised 9 percent following a decline of 3 percent in the 4th quarter last year.
  2. J.Crew sales reduced 4 percent to $527.9M. J.Crew comparable sales raised 6 percent following a decline of 7 percent in the 4th quarter last year.
  3. Madewell sales raised 16 percent to $157.9M. Madewell comparable sales raised 22 percent following a boost of 19 percent in the 4th quarter last year.
  4. Gross margin reduced to 22.4 percent from 36.7 percent in the 4th quarter last year. Throughout the 4th quarter of fiscal 2K18, the Company recorded a charge of $39.3M for expected losses on the disposition of excess merchandise inventories.
  5. Selling, general and administrative costs were $227.7M, or 31.0 percent of revenues, a difference to $252.1M, or 35.4 percent of revenues in the 4th quarter last year. This year includes transformation, transaction and severance costs of $10.8M and a benefit of $6.6M related to the lease termination payment in connection with our corporate headquarters relocation. Last year includes transformation, transaction and severance costs of $21.3M. Apart From these items, selling, general and administrative costs were $223.5M, or 30.5 percent of revenues, difference to $230.8M, or 32.4 percent of revenues, in the 4th quarter last year.
  6. Operating loss was $64.2M difference with an operating income of $4.9M in the 4th quarter last year. The 4th quarter this year reflects the impact of excess inventory write-downs. The 4th quarter last year reflects the impact of transformation costs.
  7. Net loss was $74.4M difference with net income of $34.7M in the 4th quarter last year. The 4th quarter this year reflects the impact of excess inventory write-downs. The 4th quarter last year reflects the impact of transformation costs.
  8. Adjusted EBITDA loss was $31.9M difference with Adjusted EBITDA of $63.4M in the 4th quarter last year. An explanation of the manner in which the Company uses Adjusted EBITDA and a reconciliation to comparable GAAP measures are included in Exhibit (3).

Michael J. Nicholson, President, and C-O-O and member of the Office of the C-E-O, commented, “The J.Crew brand delivered disappointing results in 2K18 as many new strategies we deployed were eventually not successful and negatively unfair our financial performance, while Madewell generated another year of record results, accelerating its path to becoming a $1B global brand.

“Despite a continued strong performance at Madewell, we believe our 2K18 results do not reflect the opportunity inherent in the collective strength of our iconic brands.

“Accordingly, we have taken immediate and decisive action to refocus our strategy and improve performance in 2K19 with the aim of returning J.Crew to profitability and sustaining momentum at Madewell. Finally, we remain highly focused on managing inventory with raised discipline while aggressively optimizing costs.”

Fiscal 2K18 highlights:

  1. Whole revenues raised 5 percent to $2,484.0M. Comparable company sales raised 6 percent following a decline of 6 percent last year.
  2. J.Crew sales reduced 4 percent to $1,779.5M. J.Crew comparable sales raised 2 percent following a decline of 10 percent last year.
  3. Madewell sales raised 26 percent to $529.2M. Madewell comparable sales raised 25 percent following a boost of 14 percent last year.
  4. Gross margin reduced to 33.6 percent from 37.8 percent last year.
  5. Selling, general and administrative costs were $824.0M, or 33.2 percent of revenues, a difference to $872.7M, or 36.8 percent of revenues, last year. This year includes transformation, transaction and severance costs of $18.6Mand a benefit of $20.7M benefit related to the lease termination payment. Last year includes transformation, transaction and severance costs of $81.1M. Apart From these items, selling, general and administrative costs were $826.1M, or 33.3 percent of revenues, difference to $791.6M, or 33.4 percent of revenues, last year.
  6. Operating income was $0.9M difference with an operating loss of $116.2M last year. Operating income this year reflects the impact of excess inventory write-downs and the benefit related to the lease termination payment. Operating loss last year reflects the impact of non-cash impairment charges.
  7. Net loss was $120.1M difference to $123.2M last year. This year reflects the impact of excess inventory write-downs and the benefit related to the lease termination payment. Last year reflects the impact of non-cash impairment charges.
  8. Adjusted EBITDA was $112.8M difference to $225.9M last year. An explanation of the manner in which the Company uses Adjusted EBITDA and a reconciliation to comparable GAAP measures are included in Exhibit (3).

Balance Sheet highlights:

  1. Cash and cash equivalents were $25.7M difference to $107.1M at the end of the 4th quarter last year.
  2. Inventories raised 33 percent to $390.5M from $292.5M at the end of the 4th quarter last year.
  3. Whole debt, net of discount and deferred financing costs, was $1,705.4M difference to $1,713.5M at the end of the 4th quarter last year. In Addition To, there were $70.8M of outstanding borrowings under the ABL Facility, with excess availability of $233.7M, at the end of the 4th quarter this year. As of the date of this release, there were outstanding borrowings of about $214M under the ABL Facility, with excess availability of about $97M.

Conference Call Information

A conference call to discuss 4th quarter results is planned for recently, March 20, 2K19, at 4:30 PM Eastern Time. Shareholders and analysts interested in listening to the call are invited to dial (877) 407-3982 about ten minutes before the start of the call.

Finlay Morris

About Finlay Morris

Finlay Morris is a fitness expert and fitness analyst over the 10 years. He is an academic teacher of Sports and Sciences and Nutritionist at the University of Denmark. Moreover, he is an Author of fitness articles on the cognitive processing of health and fitness club. He is working on a full-time basis at The Health Post Analyst.

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