J.Crew brand returns to sales growth; Mercantile, Nevereven lines to close
J.Crew Group on thursday reported a double-digit sales increase in the third quarter, with a return to growth at its namesake brand. The group also announced it will shutter the budget line Mercantile and Nevereven brand.
The New York-based company said total sales lifted 10% to $622.2 million, with comparable sales registering an 8% increase, after a disappointing 9% decline a year prior.
The group's newly relaunched namesake brand J.Crew saw sales gain 1% to $430.9 million, with comps up 4%, following a decrease of 13% in the third quarter last year.
Darling brand Madewell saw sales soar 26% to $133.7 million, as comp sales increased 22%, continuing to improve on an increase of 14% in the same period last year.
The group reported a net loss of $5.7 million, compared to $18.4 million in the third quarter last year, adding the results "reflect the impact of the benefit related to the lease termination payment."
Adjusted EBITDA was $53.6 million compared to $68.4 million last year.
"The third quarter was highlighted by double-digit revenue growth and a solid early response to our relaunch of the J.Crew brand," said Michael Nicholson, the group's Chief Operating Officer, adding the company aims to grow profitability in the final fiscal quarter by continuing to push its strong Madewell brand.
For the first nine-months, total revenues increased 5% to $1.75 billion, with comparable company sales up 5%. Net loss was $45.7 million compared to $157.9 million in the first nine months, and adjusted EBITDA was $144.7 million compared to $162.6 million.
Meanwhile, J.Crew said it will discontinue its budget clothing line called Mercantile and shut down the newly launched Nevereven brand.
The news comes after the company dismissed CEO Jim Brett last month, due to disagreements with the board and shareholders over how he was redirecting the company. Brett's new direction included the Nevereven brand.
"Overall, we believe we have a meaningful opportunity to drive EBITDA growth in 2019 through continued top-line momentum, gross margin expansion and a prioritization of expense management," concluded Nicholson.
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