In its second-largest acquisition, Amazon buys the company for $970 million.
J. Crew’s web-based sales in the third quarter amounted to $19 million, a 45.7% drop from $35 million in Q3 last year. Catalog sales fell 50%; store sales, 6%. The total effect was a 20% drop in Q3 total revenue to $151 million from $189.9 million.
Internet sales at J. Crew Group Inc. took a slide in Q3 as the company undertook a restructuring that resulted in fewer catalog pages and a decline in total sales. Web-based sales in the third quarter amounted to $19 million, a 45.7% drop from $35 million in Q3 last year. Catalog sales fell 50% to $12.6 million from $25 million. Store sales fell 6% to $94.4 million from $100.6 million. The total effect was a 20% drop in Q3 total revenue to $151 million from $189.9 million.
“The results reflect the company`s continuing transition in upgrading the quality and style of its merchandise assortments, the elimination of promotional programs and the aggressive liquidation of carryover inventory,” J. Crew said in releasing its financials. “Direct sales decreased 47% as the company strategically reduced catalog page counts and circulation and eliminated clearance and unprofitable books.”
"From my experience, a turnaround requires tough medicine that is not without painful side effects. These results are a necessary cost of our turnaround," said Millard Drexler, chairman and CEO. "Most significantly, strategic changes in our promotional practices cost us markdown sales. However, third quarter sales of full price merchandise were up 30% on a comparable store basis. The turnaround at J.Crew is a work in progress. We remain absolutely focused on upgrading the quality and style of our merchandise and we are pleased with initial customer response. They are clearly noticing the improvements in our merchandise, catalogs, online and stores."
Net loss in the third quarter was $23.6 million, compared to a net loss of $700,000 last year.
Internet sales for the first nine months of the year were $82.5 million, down 9.8% from $91.5 million a year ago. Catalog sales fell 40% to $42.3 million from $70.6 million, while store sales were slightly lower at $276.9 million vs. $280.4 million, Total revenue was 8.5% lower for the first nine months, at $479.5 million vs. $524.5 million.
Net loss for the nine months was $28 million, compared to a net loss of $19.9 million last year.
J. Crew operates 154 retail stores, a catalog business, jcrew.com, and 42 factory outlet stores.