Outlet stores

J. Crew to close 20 flagship outlet stores

Dive brief:

  • J. Crew Group said on Wednesday that total first quarter revenue increased 7% to $ 578.5 million. The company’s Madewell sales rose 15% to $ 132.9 million, while J. Crew’s flagship sales fell 4% to $ 376.1 million, according to a company press release.

  • The disparity in retailer performance continued with in-store compositions, which overall increased by 1%: J. Crew compositions fell by 1% (after a 6% drop a year ago), while Madewell’s compositions were up 10%, following a 31% increase in the first quarter of last year.

  • Gross margin declined to 37% from 38.3% in the prior year quarter, while operating profit reached $ 22.1 million from an operating loss of $ 0.9 million l last year. Net loss for the quarter fell to $ 16.2 million from $ 33.9 million a year ago.

Dive overview:

While Madewell’s growth has slowed, as evidenced by its same-store sales indicator, which jumped 31% last year, the brand remains the company’s silver lining.

The company continues to reflect on Madewell’s IPO, which interim CEO Michael Nicholson said on a conference call Wednesday would give it “overall financial flexibility” and help meet its debt maturities. The group remains in debt, with a total of $ 1.7 billion against $ 1.71 billion at the end of the first quarter of last year, the statement said. As of May 29, there were approximately $ 198 million in borrowings outstanding under its asset-backed loan facility, with excess availability of approximately $ 113 million.

The company managed to turn a profit through cost reduction measures: selling, general and administrative expenses were $ 189.8 million, or 32.8% of turnover, against $ 200.8 millionor 37.2% of sales in the first quarter of last year.

Nicholson expressed confidence in the future, which enabled the company devoid of a permanent CEO and much of the creative leadership that fueled the popularity of the J. Crew brand a decade ago. Nicholson has been leading the group solo since last month, replacing a four-person team (including himself) who led things after the abrupt departure six months ago of ex-CEO Jim Brett, who left after just over a short period of time. ‘a year. But that confidence seems centered on the potential of Madewell – who since April has had a CEO for the first time – rather than J. Crew.

As We look to the future, are optimistic about our plans to relaunch the J.Crew brand with new designs, assortments and brand expressions, and stand firm in our commitment to realize Madewell’s long-term growth potential by as a leading global brand, ”he said.

The key is therefore to fuel the growth of Madewell as quickly as possible, which still represents the minority of the company’s turnover. The company in the quarter opened one J. Crew store and 10 Madewell stores, and executives said they will continue to streamline its footprint, with plans to close approximately 20 J. Crew and factory stores.

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