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): March 10, 2009

 

 

 

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 March 10, 2009, J.Crew Group, Inc. issued a press release announcing the Company’s financial results for the fourth quarter and fiscal year ended January 31, 2009. 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 March 10, 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.

 

Date: March 10, 2009

 

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Exhibit 99.1

 

J. CREW GROUP, INC. ANNOUNCES FOURTH QUARTER AND FISCAL 2008 RESULTS

Fourth Quarter Loss Per Share of ($0.22)

Fiscal 2008 Diluted Earnings Per Share of $0.85

New York, NY – March 10, 2009 – J. Crew Group, Inc. [NYSE:JCG] today announced financial results for the three months (fourth quarter) and fiscal year ended January 31, 2009 (fiscal 2008).

Fourth Quarter highlights:

 

•

Revenues decreased 3% to $388.0 million. Store sales (Retail and Factory) decreased 3% to $252.0 million, with comparable store sales decreasing 13%. Comparable store sales increased 4% in the fourth quarter of fiscal 2007. Direct sales (Internet and Phone) decreased 2% to $123.0 million. Direct sales increased 11% in the fourth quarter of fiscal 2007.

 

•

Gross margin decreased to 27.6% of revenues from 41.3% of revenues in the fourth quarter of fiscal 2007. The decrease in gross margin is primarily due to increased markdowns and promotional selling activities.

 

•

Operating income (loss) decreased to ($20.4 million), or (5.3%) of revenues, compared with $43.3 million, or 10.8% of revenues, in the fourth quarter of fiscal 2007. Operating loss in the fourth quarter of fiscal 2008 includes non-cash asset impairment charges of approximately $2.1 million related to under performing stores.

 

•

Net income (loss) in the fourth quarter of fiscal 2008 was ($13.5 million), or ($0.22) per share, and includes the impact of non-cash asset impairment charges of approximately $0.02 per share related to under performing stores. Net income was $25.0 million, or $0.39 per diluted share, in the fourth quarter of fiscal 2007.

Millard Drexler, J. Crew’s Chairman and CEO stated: “We are disappointed with our fourth quarter operating results. Our mission, day after day, is to adjust to this new, not fun, retail reality, while not compromising our long term strategy and integrity. We believe the actions we are taking, our focus on quality products and customer service, along with our strong balance sheet, will position us well for when the environment eventually improves.”

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Fiscal 2008 highlights:

 

•

Revenues increased 7% to $1,428.0 million. Store sales (Retail and Factory) increased 7% to $974.3 million, with comparable store sales decreasing 4%. Comparable store sales increased 6% in fiscal 2007. Direct sales (Internet and Phone) increased 8% to $408.9 million. Direct sales increased 22% in fiscal 2007.

 

•

Gross margin decreased to 38.9% of revenues from 44.1% of revenues in fiscal 2007. The decrease in gross margin is primarily due to increased markdowns and promotional selling activities in the fourth quarter.

 

•

Operating income decreased 44% to $96.7 million, or 6.8% of revenues, compared to $172.5 million, or 12.9% of revenues, in fiscal 2007. Operating income in fiscal 2008 includes non-cash asset impairment charges of approximately $2.7 million related to under performing stores.

 

•

Net income for fiscal 2008 was $54.1 million, or $0.85 per diluted share, and includes the impact of non-cash asset impairment charges of approximately $0.03 per share related to under performing stores. Net income was $97.1 million, or $1.52 per diluted share in fiscal 2007.

Balance Sheet highlights as of January 31, 2009:

 

•

Cash and cash equivalents were $146.4 million at the end of the fourth quarter and include the impact of voluntary principal payments of debt of $25.0 million made during fiscal 2008. Cash and cash equivalents were $131.5 million at the end of fiscal 2007.

 

•

Inventories at the end of the fourth quarter were $187.0 million, reflecting the impact of 40 net stores opened since the end of fiscal 2007. Inventory per square foot increased 7% at the end of fiscal 2008 compared to the end of fiscal 2007.

Guidance

As the economy has continued to weaken and become more unpredictable, it has become more difficult to accurately predict results. Given the uncertainty surrounding the economic environment, the Company will suspend providing annual guidance. The Company will continue to provide guidance on a quarter to quarter basis. The Company currently expects first quarter fiscal 2009 diluted earnings per share in the range of $0.07 to $0.12. Our guidance for the first quarter excludes severance and other one time items.

Conference Call Information

A conference call to discuss fourth quarter results is scheduled for today, March 10, 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 March 17, 2009 and can be accessed by dialing (877) 660-6853 and entering account number 3055 and conference ID number 314947.

 

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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 March 7, 2009, the Company operates 229 retail stores (including 6 Crewcuts and 12 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 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, the performance of the Company’s products within the prevailing retail environment, 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 amounts)		Three Months Ended January 31, 2009				Three Months Ended February 2, 2008				Fiscal Year Ended January 31, 2009				Fiscal Year Ended February 2, 2008
Net sales
Stores		$	252,026			$	260,627			$	974,284			$	914,810
Direct			122,957				126,020				408,916				377,444
			374,983				386,647				1,383,200				1,292,254
Other			13,054				13,288				44,770				42,469
Total Revenues			388,037				399,935				1,427,970				1,334,723
Costs of goods sold, buying and occupancy costs			281,101				234,956				872,547				746,180
Gross Profit			106,936				164,979				555,423				588,543
As a percent of revenues			27.6	%			41.3	%			38.9	%			44.1	%
Selling, general and administrative expenses			127,378				121,678				458,738				416,064
As a percent of revenues			32.8	%			30.4	%			32.1	%			31.2	%
Operating income (loss)			(20,442	)			43,301				96,685				172,479
As a percent of revenues			(5.3	)%			10.8	%			6.8	%			12.9	%
Interest expense, net			1,570				1,847				5,940				11,224
Income (loss) before income taxes			(22,012	)			41,454				90,745				161,255
Provision (benefit) for income taxes			(8,463	)			16,497				36,628				64,180
Net income (loss)		$	(13,549	)		$	24,957			$	54,117			$	97,075
Income (loss) per share:
Basic		$	(0.22	)		$	0.41			$	0.88			$	1.61
Diluted		$	(0.22	)		$	0.39			$	0.85			$	1.52
Weighted average shares outstanding:
Basic			61,991				60,752				61,687				60,346
Diluted			61,991				64,003				64,027				63,748

 

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Exhibit (2)

J. Crew Group, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

 

(In thousands)		January 31, 2009			February 2, 2008
Assets
Current assets:
Cash and cash equivalents		$	146,430		$	131,510
Inventories			187,044			158,525
Prepaid expenses and other currents assets			34,926			33,293
Prepaid and refundable income taxes			23,116			9,794
Total current assets			391,516			333,122
Property and equipment, net			201,675			168,292
Deferred income taxes, net			8,862			20,188
Other assets			11,756			13,994
Total assets		$	613,809		$	535,596
Liabilities and Stockholders’ equity
Current liabilities:
Accounts payable		$	119,719		$	101,277
Other current liabilities			83,889			91,414
Deferred income taxes, net			4,049			2,382
Total current liabilities			207,657			195,073
Long-term debt			100,000			125,000
Deferred credits			73,815			67,600
Other liabilities			7,388			7,601
Stockholders’ equity			224,949			140,322
Total liabilities and stockholders’ equity		$	613,809		$	535,596

 

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Exhibit (3)

Actual and Projected Store Count and Square Footage

 

Actual 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		260		7		0			267
2nd Quarter		267		9		0			276
3rd Quarter		276		15		1			290
4th Quarter		290		11		1			300
Actual 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		1,688,016		38,685		(2,261	)		1,724,440
2nd Quarter		1,724,440		41,949		(7,899	)		1,758,490
3rd Quarter		1,758,490		67,657		(10,304	)		1,815,843
4th Quarter		1,815,843		54,471		(6,181	)		1,864,133
Projected 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		300		11		2			309
2nd Quarter		309		8		0			317
3rd Quarter		317		4		0			321
4th Quarter		321		2		0			323
Projected 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		1,864,133		49,783		(8,358	)		1,905,558
2nd Quarter		1,905,558		32,392		0			1,937,950
3rd Quarter		1,937,950		18,107		0			1,956,057
4th Quarter		1,956,057		9,512		0			1,965,569

 

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