J. Crew Delivers Strong Q1

NEW YORK – J. Crew Group generated double-digit increases in net and same-store sales and surpassed all expectations for its first quarter performance.

In the three months ended May 5, the New York-based multi-channel specialty apparel retailer posted net income of U$24.6 million, or $0.39 a diluted share, more than three times the $7.8 million, or $0.12, registered in last year’s quarter. Analysts had estimated the firm would generate EPS of $0.30.

Without numerous special items in the 2006 quarter, EPS would have been $0.22 on a non-GAAP (generally accepted accounting principles) basis. Additionally, preferred stock dividends reduced net income available to common shareholders to $4.4 million in last year’s quarter.

Total revenues grew 23.5% to $297.3 million from $240.7 million a year ago, well ahead of consensus estimates of $271.1 million.

Store sales were up 20.3% to $201 million from $167.1 million and rose 13% on a same-store basis, a figure reduced to 8% after adjustment for calendar differences.

Direct sales advanced 30.7% to $86.6 million from $66.2 million.

Gross margin leaped 110 basis points to 46.6% of sales from 45.5% a year ago.

Millard “Mickey” Drexler, chairman and chief executive officer, said, “We are pleased with our first quarter results, which reflect the hard work of our team in always doing our best to satisfy our customers.”

The company offered no specific guidance for upcoming quarters but reiterated its long-term financial targets, including mid-single digit growth in same-store sales, high-single digit growth in direct sales, net square footage expansion of 7% to 9% a year and diluted EPS growth in excess of 20%.

J. Crew operates 186 retail stores, 53 outlets, an e-commerce site at www.jcrew.com and catalog business.