J.Crew Group, Inc. Announces Fourth Quarter And Fiscal 2018 Results

J.Crew Group, Inc. (the “Company”) today announced financial results for the three months and fiscal year ended February 2, 2019. The results of the three months and fiscal year ended February 3, 2018 contain an additional week, and reflect 14 and 53 week periods, respectively. Net sales generated in the 53rd week of fiscal 2017 are not included in comparable sales.

Fourth Quarter highlights:
•Total revenues increased 3% to $733.8 million. Comparable company sales increased 9% following a decrease of 3% in the fourth quarter last year.
•J.Crew sales decreased 4% to $527.9 million. J.Crew comparable sales increased 6% following a decrease of 7% in the fourth quarter last year.
•Madewell sales increased 16% to $157.9 million. Madewell comparable sales increased 22% following an increase of 19% in the fourth quarter last year.
•Gross margin decreased to 22.4% from 36.7% in the fourth quarter last year. During the fourth quarter of fiscal 2018, the Company recorded a charge of $39.3 million for expected losses on the disposition of excess merchandise inventories.
•Selling, general and administrative expenses were $227.7 million, or 31.0% of revenues, compared to $252.1 million, or 35.4% of revenues in the fourth quarter last year. This year includes transformation, transaction and severance costs of $10.8 million and a benefit of $6.6 million related to the lease termination payment in connection with our corporate headquarters relocation. Last year includes transformation, transaction and severance costs of $21.3 million. Excluding these items, selling, general and administrative expenses were $223.5 million, or 30.5% of revenues, compared to $230.8 million, or 32.4% of revenues, in the fourth quarter last year.
•Operating loss was $64.2 million compared with an operating income of $4.9 million in the fourth quarter last year. The fourth quarter this year reflects the impact of excess inventory write-downs. The fourth quarter last year reflects the impact of transformation costs.
•Net loss was $74.4 million compared with net income of $34.7 million in the fourth quarter last year. The fourth quarter this year reflects the impact of excess inventory write-downs. The fourth quarter last year reflects the impact of transformation costs.
•Adjusted EBITDA loss was $31.9 million compared with Adjusted EBITDA of $63.4 million in the fourth 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 Chief Operating Officer and member of the Office of the CEO, commented, “The J.Crew brand delivered disappointing results in 2018 as many new strategies we deployed were ultimately not successful and negatively impacted our financial performance, while Madewell generated another year of record results, accelerating its path to becoming a $1 billion global brand.

“Despite continued strong performance at Madewell, we believe our 2018 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 2019 with the goal of returning J.Crew to profitability and sustaining momentum at Madewell. Finally, we remain highly focused on managing inventory with increased discipline while aggressively optimizing expenses.”

Fiscal 2018 highlights:
•Total revenues increased 5% to $2,484.0 million. Comparable company sales increased 6% following a decrease of 6% last year.
•J.Crew sales decreased 4% to $1,779.5 million. J.Crew comparable sales increased 2% following a decrease of 10% last year.
•Madewell sales increased 26% to $529.2 million. Madewell comparable sales increased 25% following an increase of 14% last year.
•Gross margin decreased to 33.6% from 37.8% last year.
•Selling, general and administrative expenses were $824.0 million, or 33.2% of revenues, compared to $872.7 million, or 36.8% of revenues, last year. This year includes transformation, transaction and severance costs of $18.6 million and a benefit of $20.7 million benefit related to the lease termination payment. Last year includes transformation, transaction and severance costs of $81.1 million. Excluding these items, selling, general and administrative expenses were $826.1 million, or 33.3% of revenues, compared to $791.6 million, or 33.4% of revenues, last year.
•Operating income was $0.9 million compared with an operating loss of $116.2 million 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.
•Net loss was $120.1 million compared to $123.2 million 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.
•Adjusted EBITDA was $112.8 million compared to $225.9 million 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).
more detail at: https://www.prnewswire.com/news-releases/jcrew-group-inc-announces-fourth-quarter-and-fiscal-2018-results-300815924.html

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