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 29, 2003
Commission Registrant, State of Incorporation I.R.S. Employer
File Number Address and Telephone Number Identification No.
333-42427 J. CREW GROUP, INC. 22-2894486
- --------- ----------
(Incorporated in New York)
770 Broadway
New York, New York 10003
Telephone: (212) 209-2500
333-42423 J. CREW OPERATING CORP. 22-3540930
- --------- ----------
(Incorporated in Delaware)
770 Broadway
New York, New York 10003
Telephone: (212) 209-2500
Item 7. Financial Statements and Exhibits.
99.1 Press Release issued by J. Crew Group, Inc. on May 29, 2003.
Item 9. Regulation FD Disclosure.
In accordance with SEC Release No. 33-8216, the following information which is
intended to be furnished under "Item 12. Results of Operations and Financial
Condition," is instead being furnished under "Item 9. Regulation FD Disclosure."
On May 29, 2003, J. Crew Group, Inc. issued a press release announcing the
Company's earnings for the first quarter ended May 3, 2003. A copy of the press
release is attached hereto as Exhibit 99.1.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
J. CREW GROUP, INC.
J. CREW OPERATING CORP.
By /s/ Scott M. Rosen
---------------------------------------
Name: Scott M. Rosen
Title: Executive Vice-President
and Chief Financial Officer
Date: May 29, 2003
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
99.1 Press release issued by J. Crew Group, Inc. on May 29, 2003.
Exhibit 99.1
For: J. Crew Group, Inc.
Contact: Scott M. Rosen
EVP/Chief Financial Officer
(212) 209-2545
For Immediate Release
J. CREW GROUP REPORTS FIRST QUARTER FINANCIAL RESULTS
NEW YORK (May 29, 2003) - J. Crew Group, Inc. today announced financial
results for the thirteen weeks ended May 3, 2003. Revenues for the first quarter
of fiscal 2003 decreased 3% to $161.5 million compared to $167.1 million last
year. Comparable store sales decreased 11% in the thirteen-week period, while
net sales in J. Crew's Direct business decreased 2%. Net loss was $19.6 million
compared to a net loss of $12.1 million last year. The 2003 results do not
include a tax benefit whereas the 2002 results include a tax benefit of $6.5
million. Earnings before interest, taxes, depreciation and amortization (EBITDA)
(a) were a loss of $2.0 million in the 2003 first quarter compared to a loss of
$.5 million last year.
The results of operations in the 2003 first quarter reflect a decrease
in merchandise margins of $11 million from 40.1% in 2002 to 34.6% in 2003,
offset by a decrease of $10 million in selling, general and administrative
expenses including a decrease in severance of $4 million. The decrease in
merchandise margin resulted from higher sales of prior season's merchandise (at
discounted prices) in the first quarter of 2003 compared to the first quarter of
2002 and higher markdowns related to the sale of Spring 2003 merchandise. These
results reflect management's new strategy of disposing of slow moving
merchandise in season and reducing the amount of merchandise held by its Factory
division for disposition in future seasons. Inventories at May 3, 2003 were down
30% versus May 4, 2002, despite an additional 11 stores. Comparable store
inventories were down 10%. Management expects that this current trend in
merchandise margins will continue through the second quarter.
Selling, general and administrative expenses in the first quarter of
2003, excluding severance costs, were down $6 million from last year. This
decrease included $2 million in selling expense attributable to a decrease in
the number of catalog pages circulated and $4 million from the cost reduction
initiatives adopted in the first quarter of 2002. Severance costs
-more-
Page 2
were $.9 million in the 2003 first quarter compared to a pretax charge of $5
million last year for severance costs related to headcount reductions and the
departure of a former Chief Executive Officer.
On May 6, 2003, the Company completed an offer to exchange 16% Senior
Discount Contingent Principal Notes due 2008 for its outstanding 13 1/8% Senior
Discount Debentures due 2008. Approximately 85% of the aggregate principal
amount of outstanding debentures were tendered for exchange. Interest on the new
notes will be added to the principal amount of the notes through November 15,
2005. The effect of the Exchange Offer on interest expense in fiscal 2003 will
be to increase total interest expense by $3 million but decrease cash interest
by $16 million.
J. Crew Group, Inc. is a leading retailer of men's and women's apparel,
shoes and accessories. As of May 3, 2003, the Company operated 154 retail
stores, the J. Crew catalog business, jcrew.com, and 42 factory outlet stores.
(a) EBITDA should not be considered as an alternative to any measure
of operating results as promulgated under generally accepted
accounting principles, including operating income and net income.
The Company uses EBITDA as a supplemental measure of performance
because we believe it gives the reader a more complete
understanding of our operating results. Other companies may
calculate EBITDA differently and therefore, our calculations are
not necessarily comparable with similarly titled figures for other
companies.
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.
(tables to follow)
J.Crew Group, Inc.
Summary Income Statement Data
Thirteen weeks ended
---------------------------------
05/03/2003 05/04/2002
------------- -------------
[$ in millions]
Revenues $ 161.5 $ 167.1
Gross profit 55.9 67.0
Selling, general and administrative expenses 64.8 71.0
Severance costs 0.9 5.0
Interest expense 9.8 9.6
Loss before income taxes (19.6) (18.6)
Net loss (19.6) (12.1)
------------- -------------
Interest 9.8 9.6
Depreciation & amortization 7.8 8.5
Income tax benefit - (6.5)
============= =============
EBITDA $ (2.0) $ (0.5)
============= =============
Summary Balance Sheet Data
As of
---------------------------------
Assets 05/03/2003 05/04/2002
- ------ ------------- -------------
[$ in millions]
Cash $ 19.9 $ 15.3
Inventories 100.3 143.4
Property & equipment, net 163.6 188.7
Other 46.4 57.4
------------- -------------
Total $ 330.2 $ 404.8
============= =============
Liabilities and Stockholders' deficit
- -------------------------------------
Notes payable - bank $ - $ 55.0
Accounts payable and other current liabilities 87.3 98.9
Deferred credits 63.7 67.4
Long term debt (including current portion) 326.4 284.0
Redeemable preferred stock 273.7 238.8
Stockholders' deficit (420.9) (339.3)
------------- -------------
Total $ 330.2 $ 404.8
============= =============
