J. Crew Reports $13M Q3 Income

The results "reflect strong sales increases and gross margin improvement across all channels of distribution," Bokman said yesterday during a conference call.

The company also reported a 36% increase in consolidated revenues, to $206 million from $151 million a year ago. Retail sales rose by 35% to $154 million, and comparable store sales were up by 30%, the company reported. Direct sales, both Internet and catalog, increased by 47% to $47 million "due to increased demand and new editions," according to Millard Drexler, the company's chairman and CEO.

"We continue to focus on quality, product assortments and attention to customer service, and we're pleased that the performance of the company reflects these efforts," Drexler said during the conference call. "As the holiday season proceeds, we're hopeful about the company's ability to deliver what our customers are looking for."

J. Crew also reported that gross margins increased to 43% in Q3, compared to 40% last year, "primarily attributable to lower markdowns in all channels," Drexler said. Selling, general and administrative expenses for Q3 were $76 million, or 37% of sales, compared to $66 million and 44% of sales a year earlier, with the decrease "driven primarily by operating leverage due to the increase in comparable store sales."

For the nine months, consolidated revenues were $540 million compared to $479 million. Retail sales rose to $397 million from $333 million, and comparable store sales were up 16%. Direct sales increased to $127 million from $125 million. Gross margin increased to 41% from 35%; selling, general and administrative expenses increased to $205 million from $201 million; and operating income was $19 million compared to a loss of $32 million last year.

The net loss for the nine months, however, came in at $47 million, but that was an improvement from last year's $75 million. Company officials attribute the nine months' and Q3 net losses to a large extent to interest expense related to the inclusion of preferred stock dividends that were recorded as a direct charge to stockholders' deficit in 2003.