Madewell gains and cost-cutting measures help J.Crew halve losses
New York-based multi-brand apparel and accessories retailer J.Crew Group, Inc. announced that it slashed its first-quarter net loss by half on Wednesday, as its Madewell brand continued to make strong progress.
The company’s net loss for the quarter ended May 4, 2019, totaled $16.2 million, compared to $33.9 million in the prior-year period.
This improvement in the retail group’s bottom line was largely due to a 7% increase in revenues, which came to $578.5 million, up from $540.5 million in Q1 2018. Comparable sales increased 1% during the period.
The company’s flagship J.Crew brand continued to struggle during the quarter, posting a 4% decline in net sales – which totaled $376.1 million – and a 1% decrease in comparable sales.
The group’s Madewell brand, on the other hand, proved more than capable of picking up the slack with a 15% rise in net sales ($132.9 million) and a 10% increase in comparable sales.
The implementation of cost-cutting measures at the retail group also contributed to its narrowed loss in the first quarter, reducing selling, general and administrative expenses from $200.8 million, or 37.2% of revenues, in Q1 2018 to $189.8 million, or 32.8% of revenues.
"We are encouraged by the meaningful progress we have made in the first quarter, reporting a 31% increase in adjusted EBITDA driven by continued momentum at Madewell and the early impact of our swift actions to improve profitability at J.Crew,” commented the J.Crew Group’s interim CEO Michael J. Nicholson. “As we look ahead, we are optimistic about our plans to reignite the J.Crew Brand with new designs, assortments and brand expressions, and remain steadfast in our commitment towards achieving Madewell's long-term growth potential as a leading global brand."
Nicholson stepped into his current role in April, four months after the shock exit of Jim Brett from the company in November of last year.
When announcing Nicholson’s appointment, the J.Crew Group also revealed that it was considering a range of strategic options to maximize the potential of its successful Madewell label, including a possible IPO, which – should it go ahead – could complete as early as the second half of 2019.
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