UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 25, 2008

 

 

 

Commission File Number		Registrant, State of Incorporation Address and Telephone Number		I.R.S. Employer Identification No.
333-42427		J.CREW GROUP, INC. (Incorporated in Delaware) 770 Broadway New York, New York 10003 Telephone: (212) 209-2500		22-2894486

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 2.02.

Results of Operations and Financial Condition.

On November 25, 2008, J.Crew Group, Inc. issued a press release announcing the Company’s financial results for the third quarter ended November 1, 2008. The Company is furnishing a copy of the press release hereto as Exhibit 99.1.

 

Item 9.01.

Financial Statements and Exhibits.

 

(d)

Press Release issued by J.Crew Group, Inc. on November 25, 2008.

The information in this Current Report is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), nor shall such information be deemed incorporated by reference into any filing under the Act, or the Exchange Act, except as expressly stated by specific reference in such filing.

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: November 25, 2008

 

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Exhibit 99.1

 

J. CREW GROUP, INC. ANNOUNCES THIRD QUARTER FISCAL 2008 RESULTS

Third Quarter Revenues Rise 9% to 363.1 million

Third Quarter Diluted EPS of $0.30

Revises Guidance for Fiscal 2008

New York, NY – November 25, 2008 – J. Crew Group, Inc. [NYSE:JCG] today announced financial results for the three months (third quarter) and nine months (first nine months) ended November 1, 2008.

Third Quarter highlights:

 

•

Revenues increased 9% to $363.1 million. Store sales (Retail and Factory) increased 7% to $250.9 million, with comparable store sales decreasing 3%. Comparable store sales increased 5% in the third quarter of fiscal 2007. Direct sales (Internet and Phone) rose by 13% to $101.8 million. Direct sales increased 36% in the third quarter of fiscal 2007.

 

•

Gross margin decreased to 41.6% of revenues from 45.6% of revenues in the third quarter of fiscal 2007.

 

•

Operating income decreased 32% to $32.5 million, or 9.0% of revenues, compared to $47.7 million, or 14.3% of revenues, in the third quarter of fiscal 2007. Operating income in the third quarter of fiscal 2008 includes approximately $6 million of costs related to our Direct channel systems upgrades.

 

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Net income was $19.0 million, or $0.30 per diluted share, compared to a net income of $26.8 million, or $0.42 per diluted share, in the third quarter of fiscal 2007.

Millard Drexler, J. Crew’s Chairman and CEO stated: “Despite these difficult economic times our priorities remain the same - providing innovative product, style and design, servicing our customers and making disciplined investments. At the same time, we recognize that a sea-change has occurred with the consumer. In the near term we are not immune to the significant challenges we are all facing in retail in these unprecedented times. However, our powerful brands, unique product offerings, compelling value proposition and multi-channel operating platform position us well for the long-term.”

 

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First Nine Months highlights:

 

•

Revenues increased 11% to $1,039.9 million. Store sales (Retail and Factory) increased 10% to $722.3 million, with comparable store sales decreasing 0.4%. Comparable store sales increased 6% in the first nine months of fiscal 2007. Direct sales (Internet and Phone) rose by 14% to $285.9 million. Direct sales increased 29% in the first nine months of fiscal 2007.

 

•

Gross margin decreased to 43.1% of revenues from 45.3% of revenues in the first nine months of fiscal 2007.

 

•

Operating income decreased 9% to $117.1 million, or 11.3% of revenues, compared to $129.2 million, or 13.8% of revenues, in the first nine months of fiscal 2007.

 

•

Net income was $67.7 million, or $1.06 per diluted share, compared to a net income of $72.1 million, or $1.13 per diluted share, in the first nine months of fiscal 2007.

Balance Sheet highlights as of November 1, 2008:

 

•

Cash and cash equivalents were $114.4 million at the end of the third quarter and include the impact of income taxes paid of $52.8 million and voluntary principal payments of debt of $25.0 million during the last 12 months.

 

•

Inventories at the end of the quarter were $250.1 million, reflecting the impact of 35 net stores opened since the third quarter of fiscal 2007 and 30 net stores opened since the end of fiscal 2007.

Guidance

Based upon the macro economic environment and its continuing impact on the trend of our business, we are revising our guidance for fiscal 2008. For fiscal 2008, the Company currently expects diluted earnings per share in the range of $1.11 to $1.16 as compared to its previous range of $1.44 to $1.54 and fiscal 2007 diluted earnings per share of $1.52. The Company’s revised expectations for the balance of fiscal 2008 include comparable store sales declining high single digits, Direct sales growth in the range of flat to mid single-digits and net square footage expansion of approximately 10%.

Conference Call Information

A conference call to discuss third quarter results is scheduled for today, November 25, 2008, at 4:30 PM Eastern Time. Investors and analysts interested in participating in the call are invited to dial (877) 407-0784 approximately ten minutes prior to the start of the call. The conference call will also be webcast live at www.jcrew.com. A replay of this call will be available until December 2, 2008 and can be accessed by dialing (877) 660-6853 and entering account number 3055 and conference ID number 304166.

 

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About J. Crew Group, Inc.

J. Crew Group, Inc. is a nationally recognized multi-channel retailer of women’s and men’s apparel, shoes and accessories. As of November 25, 2008, the Company operates 226 retail stores (including 5 crewcuts and 10 Madewell stores), the J. Crew catalog business, jcrew.com, and 74 factory outlet stores. Additionally, certain product, press release and SEC filing information concerning the Company are available at the Company’s website www.jcrew.com.

Forward-Looking Statements:

Certain statements herein are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect the Company’s current expectations or beliefs concerning future events and actual results of operations may differ materially from historical results or current expectations. Any such forward-looking statements are subject to various risks and uncertainties, including the strength of the economy, changes in the overall level of consumer spending or preferences in apparel, our ability to compete with other retailers, the performance of the Company’s products within the prevailing retail environment, our strategy and expansion plans, systems upgrades, reliance on key personnel, trade restrictions, political or financial instability in countries where the Company’s goods are manufactured, postal rate increases, paper and printing costs, availability of suitable store locations at appropriate terms and other factors which are set forth in the Company’s Form 10-K and in all filings with the SEC made by the Company subsequent to the filing of the Form 10-K. The Company does not undertake to publicly update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.

 

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Exhibit (1)

J. Crew Group, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

 

(Amounts in thousands, except percentages and per share data)		Three Months Ended November 1, 2008				Three Months Ended November 3, 2007				Nine Months Ended November 1, 2008				Nine Months Ended November 3, 2007
Net sales
Stores		$	250,870			$	233,588			$	722,259			$	654,182
Direct			101,812				90,315				285,958				251,424
			352,682				323,903				1,008,217				905,606
Other			10,398				8,841				31,716				29,181
Total Revenues			363,080				332,744				1,039,933				934,787
Costs of goods sold, buying and occupancy costs			212,212				180,909				591,447				511,224
Gross Profit			150,868				151,835				448,486				423,563
As a percent of revenues			41.6	%			45.6	%			43.1	%			45.3	%
Selling, general administrative expenses			118,321				104,150				331,360				294,385
As a percent of revenues			32.6	%			31.3	%			31.9	%			31.5	%
Operating income			32,547				47,685				117,126				129,178
As a percent of revenues			9.0	%			14.3	%			11.3	%			13.8	%
Interest expense, net			570				3,077				4,370				9,377
Income before income taxes			31,977				44,608				112,756				119,801
Provision for income taxes			12,936				17,771				45,091				47,683
Net income		$	19,041			$	26,837			$	67,665			$	72,118
Income per share:
Basic		$	0.31			$	0.44			$	1.10			$	1.20
Diluted		$	0.30			$	0.42			$	1.06			$	1.13
Weighted average shares outstanding:
Basic			61,878				60,725				61,588				60,257
Diluted			64,078				64,195				64,127				63,923

 

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Exhibit (2)

J. Crew Group, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

 

(In thousands)		November 1, 2008			February 2, 2008			November 3, 2007
Assets
Current assets:
Cash and cash equivalents		$	114,456		$	131,510		$	63,760
Inventories			250,140			158,525			210,774
Prepaid expenses and other current assets			36,240			33,293			42,121
Prepaid income taxes			6,918			1,194			—
Refundable income taxes			—			8,600			8,600
Total current assets			407,754			333,122			325,255
Property and equipment, net			198,032			168,292			156,524
Other assets			31,302			34,182			29,941
Total assets		$	637,088		$	535,596		$	511,720
Liabilities and Stockholders’ equity
Current liabilities:
Accounts payable		$	134,576		$	101,277		$	106,811
Other current liabilities			84,415			93,796			80,310
Income taxes payable			—			—			13,401
Total current liabilities			218,991			195,073			200,522
Long-term debt			100,000			125,000			125,000
Deferred credits			74,378			67,600			69,140
Other liabilities			7,654			7,601			6,689
Stockholders’ equity			236,065			140,322			110,369
Total liabilities and stockholders’ equity		$	637,088		$	535,596		$	511,720

 

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Exhibit (3)

Actual and Projected Store Count and Square Footage

 

Fiscal 2008
Quarter		Total stores open at beginning of the quarter		Number of stores opened during the quarter		Number of stores closed during the quarter			Total stores open at end of the quarter
1st Quarter (Actual)		260		7		0			267
2nd Quarter (Actual)		267		9		0			276
3rd Quarter (Actual)		276		15		1			290
4th Quarter (Projected)		290		11		1			300
Fiscal 2008
Quarter		Total gross square feet at beginning of the quarter		Gross square feet for stores opened or expanded during the quarter		Reduction of gross square feet for stores closed or downsized during the quarter			Total gross square feet at end of the quarter
1st Quarter (Actual)		1,688,016		38,685		(2,261	)		1,724,440
2nd Quarter (Actual)		1,724,440		41,949		(7,899	)		1,758,490
3rd Quarter (Actual)		1,758,490		67,657		(10,304	)		1,815,843
4th Quarter (Projected)		1,815,843		54,547		(6,181	)		1,864,209

 

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