J. Crew Improves Operating Results; Direct Sales Pick Up

New York-based apparel cataloger/retailer J. Crew improved its operating income to a gain of $8 million for the second quarter ended July 31, compared with an operating loss of $15 million last year. Its net loss for the quarter totaled $14 million, compared to a loss of $28 million last year.

During the quarter, J. Crew-which is not publicly traded-got hit with a $9 million charge, due to the inclusion of preferred stock dividends ($8 million) that were recorded as a direct charge to stockholders’ deficit last year. (According to a company spokesperson, these preferred stock dividends were included in the interest expense this year due to a change in accounting requirements that requires the mandatorily redeemable portion of preferred stock to be included as debt.)

Revenue for the quarter increased 13% to $188 million from $167 million for last year. Sales from the Internet and catalog increased 16% to $44 million, from $38 million last year. Comparable store sales increased 12%.

For the first half of the year, direct sales tumbled 14%, from $93 million to $80 million this year because of reduced clearance sales and a decline in catalog circulation. J. Crew reported that revenue increased 2% to $334 million, from $329 million last year, due largely from gains in retail.

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