Financial Reports: J. Crew, Excelligence, CDW

Solid Turnaround for J. Crew
New York-based apparel cataloger/retailer J. Crew had plenty of good news to report from its fourth-quarter and fiscal 2005 financials. Revenue for the fourth-quarter rose 10%, while sales for the year grew 19%. What’s more, the company posted net income of $4 million for fiscal 2005, a turnaround from the $100 million loss ($50 million of which had resulted from financing of debt) it reported the previous year.

For the fourth quarter ended Jan. 28, total sales were $290 million, up from $264 million the previous year. Stores (retail and factory) sales, increased 10%, to $201 million, with comparable store sales up 8%. Combined Internet and catalog sales increased 11%, to $80 million.

Gross margin for the fourth quarter decreased to 37%, from 39% for 2004, as a result of increased markdowns. Operating income decreased by $5 million, to $15 million. But the net loss for the fourth quarter was $6 million compared with last year’s $52 million, which included the $50 million loss on the refinancing of debt.

For the full year, revenue hit $953 million. Stores sales increased 16%, to $670 million, with a comparable store sales increase of 13%. Direct sales increased by 28%, to $254 million.

Gross margin for the year increased to 42%, from 40% the previous year, due to higher full-price sell-through during the first half of the year. Operating income soared 105%, to $80 million from $38 million.

Record Year for Excelligence
Despite being delisted from Nasdaq in February, educational products manufacturer/marketer Excelligence Learning Corp. logged a record-setting 2005.

For the year ended Dec. 31, the Monterey, CA-based company reported revenue of $132.7 million, up nearly 10% from $121 million in 2004. Revenue in the Early Childhood division, which includes the Discount School Supply and Early Childhood Manufacturers’ Direct catalogs of products for preschools and educators, grew 13%; sales in the Elementary School division, which sells fundraising kits to schools, declined less than 1%.

Net income soared 180%, to $3.6 million. The Early Childhood Division registered a 17% increase in gross profit, to $37 million, compared with $31.7 million in 2004. The Elementary School division’s gross profit improved to $9.0 million, up from $8.9 million in 2004. As a whole, the company’s gross profit for the year rose more than 13%, to $46 million, or 34.7% of revenue, compared with $40.6 million, or 33.5% of revenue, in 2004.

“Fiscal year 2005 was a successful year for our company, despite the many challenges we faced,” CEO Ron Elliott said in a statement. “We achieved another year of record revenues and improved our margins and profitability. We achieved these record results despite the significant expenses and resources we devoted to the internal investigation and restatement of our financial results. With the filing of our 10-K and proxy statement last week, I am pleased to say that we are now current with our financial reporting obligations.”

Although Excelligence officials insist their financial reporting is current, the Nasdaq Listing and Hearing Review Council affirmed the Nasdaq Listing Qualifications Panel’s Feb. 1 decision to delist the company’s securities because it had not been able to file its quarterly reports on time. The company is currently trading on the Pink Sheets under “LRNS.PK.” The company intends to submit an initial listing application to Nasdaq.

CDW Off to a Solid Start
Vernon Hills, IL-based computer products reseller CDW Corp. (Nasdaq: CDWC) jumped out of the gate fast during the first quarter ended March 31.

Year-over-year sales for the quarter rose nearly 8%, to $1.58 billion from $1.47 billion in the first quarter of 2005. Gross profit increased 12%, to $253.9 million. Net income inched up just 0.5%, to $61.7 million, but earnings of $0.75 per share nonetheless exceeded analyst expectations.

Sales within the corporate division, which consists primarily of business customers, rose 6%, to $1.15 billion. Public sector sales — to federal, state, and local government entities, and educational institutions — rose 13%, to $438.4 million. Direct Web sales set a first-quarter record, hitting $501 million, which represented a 15 % increase over the first quarter of 2005 and 31.5 % of total sales.

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