J. Crew generated $1.43 billion during its fiscal year 2008, up from $1.33 in 2007. But the company’s net income dropped from $97.1 million to $54.1 million. The year ended Jan 31.
The company’s stores pulled in $974.3 million, up from $914.8 million, while direct channels generated $408.9 million, compared with $377.4 million a year earlier. The company also generated $44.8 million in “other” income during fiscal 2008.
During the company’s fourth quarter, store revenue fell from $260.6 million a year ago to $252 million. Direct revenue slipped from $386.6 million to $375 million. The company recorded a fourth-quarter net loss of $13.6 million, compared with $25 million in net income in fourth-quarter 2007.
“We are disappointed with our fourth quarter operating results,” said Millard Drexler, J. Crew's chairman and CEO, in a statement. “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."
The Analyst’s Take: The three months of J. Crew’s fourth quarter include the two leading up to the December holidays, and the one afterward, during which – assumedly – much discounting occurs. Most of J. Crew’s expenses for the quarter are in line with fourth-quarter 2007, with the exception of costs of goods sold, which spiked despite revenue for the quarter dropping. The assumption: Discounting is painful.
