Strong sales help J Crew double Q3 profit

US: Strong sales help J Crew double Q3 profit

By just-style.com | 25 November 2009

Q3 profit soars to $43.9m
Revenues rise 14% to $414.1m
Inventories down 10.5% to $223.9m

Upscale US fashion retailer J Crew Group has more than doubled its third quarter profit, thanks to higher full-price sales of its trend-right merchandise, but says it remains cautious in its outlook for the holiday period.

During the three months to 31 October, net income soared to $43.9m or $0.67 per share, from $19.0m or $0.30 per share, a year earlier.

Revenues jumped 14% to $414.1m, driven by an 8% hike in same-store sales - a key measure of performance - and a 4% rise in direct sales (Internet and phone) to $105.5m.

Store sales were up 20% to $300.1m, the company said.

Gross margin expanded almost seven points to 48.4% of revenues and operating margin more than doubled to 18.2% - both of which are historical highs for the retailer and were helped by higher sales of full-price merchandise.

"Regardless of the economic environment our long term mission does not change - it's about product, it's about quality, it's about design, it's about service, it's about creativity," said Millard Drexler, J Crew's chairman and CEO.

"It might sound simple, but in this business sometimes the simplest things are the hardest to achieve."

Inventories at the end of the quarter were down 10.5% to $223.9m, from $250.1m a year ago.

The company, which operates 243 stores under the J Crew, Crewcuts and Madewell nameplates, said it expects fourth quarter earnings per share in the range of $0.37 to $0.42.

Sectors: Apparel, Finance, Retail

Companies: J Crew