J. Crew Rows to Profit in Q3

NEW YORK – J. Crew Group Inc. flipped to a profit from a year-ago loss and increased its operating profit by more than half in the third quarter ended Oct. 28.

Net income available to common shareholders finished the three months at $26 million, or 40 cents a diluted share, versus a net loss of $336,000, or 1 cent a share, in the 2005 quarter. Adjusted net income, which excludes numerous items included in generally accepted accounting principles (GAAP), was 27 cents a diluted share, 6 cents above the consensus estimate. Operating profit was up 51% to $33.2 million.

The improved profitability was driven by a solid 23.4% increase in revenues, including both retail and direct channels, to $275.6 million from $223.4 million a year ago. Same-store sales increased 19% against a 3% comp increase in last year’s quarter.

In a statement, Millard Drexler, chairman and chief executive officer, called the results “better than expected” and announced that the company was raising its guidance for the full year by 9 cents, to a diluted EPS range of 95 to 97 cents.

Net income for the nine months hit $27.7 million, or 62 cents a diluted share, versus a loss of $435,000 in last year’s comparable period. Revenues moved up 18.4%, to $785.4 million from $663.3 million, while comparable-store sales progressed 16%.

The figures were released after the equity markets closed on Tuesday.

J. Crew, which completed an initial public offering last June, operates 176 stores, 51 outlets, an e-commerce web site at www.jcrew.com and a catalog operation.