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): May 28, 2009
J.CREW GROUP, INC.
(Exact name of registrant as specified in its charter)
Commission File Number: 333-42427
| DE | 22-2894486 | |
| (State or other jurisdiction of incorporation) |
(IRS Employer Identification No.) |
770 Broadway
New York, New York 10003
(Address of principal executive offices, including zip code)
212-209-2500
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report)
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)) |
| Item 2.02. | Results of Operations and Financial Condition. |
On May 28, 2009, J.Crew Group, Inc. issued a press release announcing the Company’s financial results for the first quarter ended May 2, 2009. The Company is furnishing a copy of the press release hereto as Exhibit 99.1.
| Item 9.01. | Financial Statements and Exhibits |
(a) through (c) Not applicable
(d) Exhibits:
The following exhibit is furnished with this Current Report on Form 8-K:
| Exhibit No. |
Description | |
| 99.1 | Press Release issued by J.Crew Group, Inc. on May 28, 2009. |
The information in this Current Report is being furnished and shall not be deemed “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 Securities Act of 1933, as amended, 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.
| J.CREW GROUP, INC. | ||
| By: | /s/ James S. Scully | |
| Name: | James S. Scully | |
| Title: | Chief Administrative Officer and | |
| Chief Financial Officer | ||
Date: May 28, 2009
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Exhibit 99.1
| Company Contact: | ||||
| James S. Scully | ||||
| Chief Administrative Officer and Chief Financial Officer | ||||
| (212) 209-8040 | ||||
| Investor Contact: | ||||
| Allison Malkin/Chad Jacobs/Joe Teklits ICR, Inc. | ||||
| (203) 682-8200 | ||||
J. CREW GROUP, INC. ANNOUNCES FIRST QUARTER FISCAL 2009 RESULTS
First Quarter Revenues of $345.8 million
First Quarter Diluted Earnings Per Share of $0.32
New York, NY – May 28, 2009 – J. Crew Group, Inc. [NYSE:JCG] today announced financial results for the three months ended May 2, 2009 (first quarter fiscal 2009).
First quarter highlights:
| • | Revenues increased 2% to $345.8 million. Store sales (Retail and Factory) increased 5% to $240.7 million, with comparable store sales decreasing 5%. Comparable store sales increased 2% in the first quarter of fiscal 2008. Direct sales (Internet and Phone) decreased by 6% to $95.4 million. Direct sales increased 17% to $100.9 million in the first quarter of fiscal 2008. |
| • | Gross margin decreased to 42.2% of revenues from 46.9% of revenues in the first quarter of fiscal 2008. The decrease in gross margin is primarily related to increased markdowns as a result of beginning of quarter inventory levels. |
| • | Operating income decreased 34% to $35.3 million, or 10.2% of revenues, compared to $53.0 million, or 15.6% of revenues, in the first quarter of fiscal 2008. Operating income in the first quarter of fiscal 2009 includes a charge of $1.3 million for severance and related costs associated with our workforce reduction announced in February 2009 and non-cash asset impairment charges of $1.0 million related to underperforming stores. |
| • | Net income was $20.4 million, or $0.32 per diluted share and includes the impact of severance and asset impairment charges of approximately $0.02. Net income was $30.5 million, or $0.48 per diluted share, in the first quarter of fiscal 2008. |
Millard Drexler, J. Crew’s Chairman and CEO stated: “We are relatively pleased with our first quarter results and while earnings were lower than last year, we did experience an improved trend in our business. We think it is clear that there is no choice in this environment than to continue to be creative and figure out where the customer is going, not to respond to where he or she has been.”
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Balance Sheet highlights as of May 2, 2009
| • | Cash and cash equivalents were $154.6 million at the end of the first quarter compared to $121.5 million at the end of the first quarter in the prior year. |
| • | Inventories at the end of the quarter were $193.9 million, reflecting the impact of 43 net stores opened since the first quarter of fiscal 2008. Inventory per square foot was flat to last year at the end of the first quarter of fiscal 2008. |
Guidance
The Company currently expects second quarter fiscal 2009 diluted earnings per share in the range of $0.08 to $0.12.
Conference Call Information
A conference call to discuss first quarter results is scheduled for today, May 28, 2009, 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 June 4, 2009 and can be accessed by dialing (877) 660-6853 and entering account number 3055 and conference ID number 323565.
About J. Crew Group, Inc.
J. Crew Group, Inc. is a nationally recognized multi-channel retailer of women’s, men’s and children’s apparel, shoes and accessories. As of May 28, 2009, the Company operates 238 retail stores (including 8 crewcuts and 14 Madewell stores), the J. Crew catalog business, jcrew.com, and 76 factory outlet stores. Additionally, certain product, press release and SEC filing information concerning the Company is 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, 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)
| (In thousands, except percentages and per share data) |
Three Months Ended May 2, 2009 |
Three Months Ended May 3, 2008 |
||||||
| Net sales |
||||||||
| Stores |
$ | 240,726 | $ | 229,109 | ||||
| Direct |
95,360 | 100,934 | ||||||
| 336,086 | 330,043 | |||||||
| Other |
9,684 | 10,536 | ||||||
| Total Revenues |
345,770 | 340,579 | ||||||
| Costs of goods sold, buying and occupancy costs |
199,833 | 180,692 | ||||||
| Gross Profit |
145,937 | 159,887 | ||||||
| As a percent of revenues |
42.2 | % | 46.9 | % | ||||
| Selling, general and administrative expenses |
110,669 | 106,841 | ||||||
| As a percent of revenues |
32.0 | % | 31.4 | % | ||||
| Operating income |
35,268 | 53,046 | ||||||
| As a percent of revenues |
10.2 | % | 15.6 | % | ||||
| Interest expense, net |
1,077 | 2,370 | ||||||
| Income before income taxes |
34,191 | 50,676 | ||||||
| Provision for income taxes |
13,746 | 20,175 | ||||||
| Net income |
$ | 20,445 | $ | 30,501 | ||||
| Income per share: |
||||||||
| Basic |
$ | 0.33 | $ | 0.50 | ||||
| Diluted |
$ | 0.32 | $ | 0.48 | ||||
| Weighted average shares outstanding: |
||||||||
| Basic |
62,130 | 61,192 | ||||||
| Diluted |
63,319 | 64,076 | ||||||
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Exhibit (2)
J. Crew Group, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
| (In thousands) |
May 2, 2009 | January 31, 2009 | May 3, 2008 | ||||||
| Assets |
|||||||||
| Current assets: |
|||||||||
| Cash and cash equivalents |
$ | 154,578 | $ | 146,430 | $ | 121,532 | |||
| Inventories |
193,923 | 187,044 | 174,493 | ||||||
| Prepaid expenses and other current assets |
30,746 | 34,926 | 32,850 | ||||||
| Prepaid & refundable income taxes |
9,892 | 23,116 | 8,600 | ||||||
| Total current assets |
389,139 | 391,516 | 337,475 | ||||||
| Property and equipment, net |
205,683 | 201,675 | 174,438 | ||||||
| Other assets |
20,161 | 20,618 | 33,299 | ||||||
| Total assets |
$ | 614,983 | $ | 613,809 | $ | 545,212 | |||
| Liabilities and Stockholders’ equity |
|||||||||
| Current liabilities: |
|||||||||
| Accounts payable |
$ | 97,503 | $ | 119,719 | $ | 95,657 | |||
| Other current liabilities |
83,871 | 83,889 | 77,816 | ||||||
| Current portion of long-term debt |
1,100 | 800 | — | ||||||
| Income taxes payable |
— | — | 6,669 | ||||||
| Deferred income taxes, net |
4,049 | 4,049 | — | ||||||
| Total current liabilities |
186,523 | 208,457 | 180,142 | ||||||
| Long-term debt |
98,900 | 99,200 | 100,000 | ||||||
| Deferred credits |
73,825 | 73,815 | 68,388 | ||||||
| Other liabilities |
7,361 | 7,388 | 7,715 | ||||||
| Stockholders’ equity |
248,374 | 224,949 | 188,967 | ||||||
| Total liabilities and stockholders’ equity |
$ | 614,983 | $ | 613,809 | $ | 545,212 | |||
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Exhibit (3)
Actual and Projected Store Count and Square Footage
Fiscal 2009
| 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) |
300 | 12 | 2 | 310 | ||||
| 2nd Quarter (Projected) |
310 | 7 | 0 | 317 | ||||
| 3rd Quarter (Projected) |
317 | 4 | 0 | 321 | ||||
| 4th Quarter (Projected) |
321 | 1 | 0 | 322 |
Fiscal 2009
| 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) |
1,864,133 | 52,185 | (8,258 | ) | 1,908,060 | ||||
| 2nd Quarter (Projected) |
1,908,060 | 29,992 | 0 | 1,938,052 | |||||
| 3rd Quarter (Projected) |
1,938,052 | 18,064 | 0 | 1,956,116 | |||||
| 4th Quarter (Projected) |
1,956,116 | 4,512 | 0 | 1,960,628 |
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