- Express Shares Fall 21% on Weak Q3, Guidance
- Filing Reveals Edward Lampert's Stake in Sears
- Engaged Pushes for Michael Jeffries' Ouster, Sale at A&F
J. Crew extended its string of very positive results by reporting third-quarter revenues increased 21 percent to $332.7 million; same-store sales rose 5 percent on a calendar-adjusted basis, and operating income increased 44 percent to $47.7 million, versus $33.2 million in the third quarter of fiscal 2006.
Net income was 42 cents a share versus 27 cents a share on an adjusted basis, reflecting a normalized tax rate. In total dollars, net was $26.8 million versus $26 million in the same period a year ago, when there was an unusually low tax rate of 7.1 percent compared with 39.8 percent in the latest quarter
As a result of the strong quarter, the company now expects fiscal 2007 diluted earnings per share of $1.50 to $1.52, compared with previous guidance of $1.42 to $1.46.
Among the highlights of the quarter cited by executives:
- Direct sales that grew 36 percent to $90 million, but are expected to moderate in the fourth quarter.
- Strong reaction to differentiated colors and details in the collections.
- Sales, general and administrative expenses leverage.
In addition, there's been ongoing quality and style upgrades for a luxury appeal resulting in some higher prices, though still lower than those offered by designers. "We don't see any resistance to price and it's all relevant to our investment in higher-price goods," said Millard "Mickey" Drexler, J. Crew's chairman and chief executive officer, during a conference call. "But if you look at our prices, none of them are unreasonable."
Productivity is also up to $560 in sales a square foot from $510 a year ago. "We are constantly asking what can we do to drive our productivity and maximize every square inch," Drexler said.
"The only way to rise above the crowd and build a powerful franchise is to continue to stand for quality business. We will continue to push the envelope in terms of quality and style, as we move further into the holiday business."