J.Crew Group pulled in $357.6 million during its second quarter, besting the $336.3 million it generated during second-quarter 2008. The company’s net income ticked up from $18.1 million a year ago to $18.6 million.
On a percentage basis, net income was 5.2% for the quarter just ended, compared with 5.4% in second-quarter 2008. The company’s most recent quarter ended Aug. 1.
Broken out by channel, J.Crew’s direct efforts brought in $88.2 million during the most recent quarter, compared with $83.2 million a year ago. Additionally, second-quarter 2008’s results were negatively affected by systems upgrades which impaired the firm’s ability to capture, process, ship and service customer orders, according to the company’s financial filings.
During a earnings teleconference, CFO James Scully noted that the company’s direct marketing circulation was down 27% in quarter one from last year’s level, and 30% for the first half. The company plans for its circulation to be down by 20% during the remainder of the year.
“We have eliminated some re-mails, and we have done some testing,” Scully said, according to transcription service Seeking Alpha. “It is really not that we are touching fewer customers, it is how we touch the customers.”
Scully added that he plans deeper tests into the company’s house file.
Its retail operations generated $259.1 million, up from $242.3 million. Between the two quarters the company opened two J.Crew retail stores, one “crewcuts” store, one J.Crew factory store and five Madewell stores.
The Eavesdropper’s Take: Among catalogers and retailers, there’s been a raft of sentiment regarding the lousy Christmas 2008 season and how consumer buying patterns didn’t match what marketers had laid in. Much of the public discussion has been couched in fairly sterile language, which is why J. Crew CEO Millard S. Drexler’s comment about year-over-year upcoming fourth quarter sales during a late-August earnings call was refreshing, if un-revelatory. To quote Drexler:, as recorded by Seeking Alpha: “Remember what we are up against. The nightmare of all nightmares. There was nothing worse than last fourth quarter. We lost a lot of money. I will tell you one thing we learned, to me it has always been a rule. It ain’t inventory that drives profit: It is the right inventory that drives profit. You can buy all day long today and if you aren’t buying the right stock, the right inventory, the right fashion it ain’t getting you the sales expect at second and third markdowns and on promotions.”
