J. Crew Sales Tumble as Chain Struggles With Slow Trafficby
Retailer’s same-store sales fall for eighth straight quarter
Results signal that CEO’s turnaround is slow to materialize
J. Crew Group Inc.’s sales tumbled last quarter after the preppy-apparel chain struggled to win back customers and pull out of a two-year slump.
Same-store sales -- a closely watched measure -- plunged 8 percent in the second quarter, the New York-based company said in a filing Wednesday. The figure marked the eighth straight quarter of declines and was slightly worse than the 7 percent drop it reported in the previous three months.
Chief Executive Officer Mickey Drexler blamed a “challenging traffic environment” for hurting business, though the latest results follow years of sluggish demand. Drexler has been trying to bring customers back to J. Crew after fashion missteps and price increases alienated shoppers.
As part of its turnaround plan, J. Crew announced Monday that it would sell a limited collection of women’s clothing through Nordstrom Inc.’s stores and website. The retailer is also focused on expanding its younger, hipper Madewell brand and its off-price offerings.
J. Crew’s adjusted earnings before interest, taxes, depreciation and amortization were $38.3 million in the second quarter, which ended July 30. That was down from $41 million a year earlier. Its net loss was $8.6 million, compared with $13.6 million a year ago.
“We are focused on driving sales productivity with exciting new merchandising and marketing initiatives,” Drexler said in a statement. “Overall, I am encouraged by the work that the teams are doing as we evolve our business.”
The retailer’s 7.75 percent bonds maturing in 2019, last traded at 39.5 cents on the dollar on Aug. 26, according to Trace, the bond-pricing reporting system of the Financial Industry Regulatory Authority.
J. Crew’s slow comeback has brought challenges to its private equity backers. TPG, which led the company’s buyout five years ago, cut the value of its stake in J. Crew by 84 percent at the end of 2015. The firm told investors that its $478.6 million equity holding in J. Crew had fallen to $76 million.
Nordstrom began selling J. Crew’s Madewell brand in 2015 and has highlighted the partnership as a success in enticing younger female shoppers. The latest agreement with Nordstrom is the only one of its kind in the U.S. and not a push toward selling more clothes through other chains, J. Crew said on Monday.