"We're very pleased," J. Crew CEO Millard Drexler stated in reviewing the fiscal year ending Feb. 3 for the company. Revenues of $1.15 billion and $808.5 million in store sales each equaled gains of 21% compared to FY 2005. Internet and catalog sales leapt 22% to $308.6 million even as the company accelerated expansion of its bricks-and-mortar empire. Five stores were shuttered in FY 2006 but 29 new ones came on line, among them two fresh retailing concepts, Crewcuts and Madewell.
"We are starting to evolve into a category of our own, and the exciting thing is that people are starting to recognize us for that," offered Drexler, whose company now operates 276 stores totaling 1.54 million-sf of space. Of those, 178 are retail shops and 51 are so-called factory outlets, creating a platform drastically different from the catalog-only approach employed during J. Crew's launch nearly a quarter century ago. The company anticipates expanding its net sf by 7% to 9% in the coming year, according to Drexler.
Same-store sales productivity was among the highlights of FY 2006 listed by Drexler, who marveled over sales per sf improving to $527 from $457 the previous year. Same-store sales only registered a 7% gain in the fourth quarter versus 13% for all of FY 2006, but Drexler stressed that the operating margin more than doubled to 10.2% in the fourth quarter.
Revenues during the final frame totaled $366.7 million, while sales registered $241.8 million. There was also a spike of Internet and catalog business in the fourth quarter, with the $113.2 million in sales from those sources up an astounding 43 percent over the final three months of FY 2005.
Completion of J. Crew's initial public offering, executed in June 2006, was also a key step last year, says Drexler, who says it will strengthen the firm's "financial flexibility" after officials spent months addressing the complexities of that process. "This provides us with a strong capital base for the continued execution of our growth plans," conveyed Drexler. Looking forward, J. Crew anticipates comparable store sales growth to be in the mid-single-digit range this year and direct sales to average nearer, but not quite, double digits.
Other goals in 2007 include the continued rollout of new products and locations. Crewcuts, which caters to children aged two to 10, is slated to grow by two stand-alone stores and 12 "shop-within-shop" locations, while the first of five Madewell stores scheduled to open this year did so last Friday in Austin, TX. Drexel described the Madewell approach as offering a new line of "everyday clothes" for women, part of the company's plan to explore new territory while remaining fashionable. "The buzz has been increasing as the word gets out," Drexell says of Madewell, which made its first appearance last summer.
As for areas to improve, J. Crew has not done as well in the gift-giving arena as desired, says Drexel, who promised the company is taking a new approach on that front by developing a line of "quirky J. Crew gift-giving items" to offer munificent consumers by the launch of the 2007 holiday season.
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