Trying on the numbers
A quick check of J. Crew's first-quarter press release (these numbers are also released in the S-1 registration statement) shows some heartening signs. Net income came in at $5 million, compared with a net loss of $24 million this time last year. Same-store sales increased a whopping 37%, while consolidated revenues increased 45% to $211 million. Of course, same-store sales can indeed sound astonishing when a company is up against an easy comparison to last year, and that's definitely the case here -- comps increased a mere 4% during the same quarter last year.
The financials also reveal that aforementioned long-term debt -- $590 million, as of the first quarter. J. ...view middle of the document...
Selling, general, and administrative (or SG&A) expenses have shown a steady downward trend since 2001, with a slight uptick this past year.
In addition, J. Crew is free-cash-flow positive in a big way. Its free cash flow ended the company's most recent fiscal year at $48 million, up 330%. The company uses its capital expenditures to open new stores, provide working capital, make system enhancements, and pay debt service requirements. Although capital expenditures in the first quarter were a mere $4 million, the company plans to spend $25 million in fiscal 2005 to open 10 new stores and implement information technology initiatives.
Sales Analysis. J. Crew Group reported sales of $1.72 billion for the fiscal year ending January of 2011. This represents an increase of 9.1% versus 2010, when the company's sales were $1.58 billion. Sales at J. Crew Group have increased during each of the previous five years (and since 2006, sales have increased a total of 81%).
J. Crew is an American clothing and accessories retailer operating since 1983. The development of the company was accompanied by numerous challenges caused by the growing competition, especially from the part of clothing and accessories manufacturers from developing countries. Nevertheless, the company has overcome numerous challenges expanding its business and focusing on new directions in the marketing development of the company. In this respect, it is worth mentioning the fact that the company entered brick and mortar market in 1989. The 1990s were the period of the consistent marketing growth and expansion which continued in the early 2000s. However, in 2008-2009 the company has faced substantial difficulties which were provoked by the economic recession accompanied by the downfall of the buying power of customers and financial problems in the banking system. Moreover, the financial position of J. Crew proves to be far from perfect. At any rate, the stock price history (See Appendix) shows that the S&P500 week change in stock price of the company decreased by over 16%. Nevertheless, such a decrease does not necessarily mean that the company is in a profound crisis because the overall financial statistics of the company maintains positive trends. Anyway, the financial downturn of the company has ended, while its peak was in 2008. 2009, instead, became the year of the slow but steady rise of the company and improvement of its financial position can be clearly traced through its financial data (See Appendix Financial highlights). Even though the profitability of the company remains relatively low, it is quite a good trend, taking into consideration the current business environment, in which many companies proved to be unable to cope with financial problems and sank rapidly.
The financial information is of the utmost importance in terms of the business analysis because financial information reveals key facts about the actual position of the company in the financial...