• Q3 net income fell to $37.8m
  • Revenues increased 4% to $429.3m
  • Same-store sales fell 1%

Specialty apparel retailer J Crew Group Inc has lowered its full-year earnings outlook after booking a 14% drop in third quarter profit as it turned to promotions to try to clear merchandise.

In the three months to 30 October, net income fell to $37.8m or $0.58 per share, down from $43.9m or $0.67 per share, in the same period last year. 

Revenues increased 4% to $429.3m, with store sales rising 1% to $303.3m. But same-store sales fell 1%, the company said. 

Gross margin dropped to 43.5% of revenues, down from 48.4% of revenues a year ago. And inventories at the end of the quarter rose 16.7% to $261.0m.

Based on its third quarter performance, the retailer has lowered its full-year earnings outlook to the range of $2.08 to $2.13. This compares with previous guidance of $2.25 to $2.35 and earnings per share of $1.91 the year before. 

Separately J Crew, which operates 250 JCrew, Crewcuts and Madewell stores, said it had agreed to a $3bn takeover by private equity firms TPG Capital and Leonard Green & Partners.