For J.Crew, debt continues to climb in the face of slipping sales, and PVH saw growth in revenue and sales, beating its previous guidance.
In a Nutshell: Things didn’t go all that well for J.Crew in the second quarter ended July 29 as sales continued to slide and losses more than doubled. Losses at the company widened to $20.7 million from $8.6 million in the same time last year, which J.Crew owed to the cost of its transformation.
Hoping he’ll step in and stop the financial bleeding, J.Crew named Vincent Zanna as new chief financial officer, who had been the company’s treasurer and senior VP of finance. (At the same time, former CEO Mickey Drexler, who stepped down from his post in June, has taken a role as chairman of activewear brand Outdoor Voices’ board of directors).
Sales: Sales at J.Crew slipped another 7 percent to $443.1 million. Comparable sales fell 8 percent in the quarter, following a 9 percent decrease in sales the prior year second quarter. Madewell continues to be a bright spot for the company, with sales up 19 percent to $93.1 million. Comp sales at Madewell were up 11 percent, after a 3 percent jump in the second quarter last year.
Earnings: Total revenue at J.Crew fell 2 percent to $560.9 million in the quarter. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) jumped 65 percent to $63.1 million thanks to a decline in cost of goods sold.
CEO’s Take: Jim Brett, CEO, said, “Overall, I am optimistic about the opportunities that lie ahead, particularly when reviewing the strong talent, capabilities and commitment within the organization. The team delivered solid progress on our transformation plan during the second quarter, highlighted by expansion in gross margin and reduced expenses that drove an increase in Adjusted EBITDA. And I am confident about evolving our brand strategy to drive long term profitable growth.”
In a Nutshell: For PVH, the second quarter ended July 30 proved better than expected. Revenues were up, earnings per share outperformed guidance, reaching $1.52 (on a GAAP basis) compared to an expected $1.35 to $1.38. And its Calvin Klein and Tommy Hilfiger businesses continue to perform well.
Owed to this performance, PVH raised its outlook for the full year 2017. PVH said consolidated revenues will be up roughly 6 percent this year, while revenue for the Calvin Klein business will see an 8 percent increase, and Tommy Hilfiger a 6 percent increase.
The company expects to see its brands drive performance in the second half of the year despite what CEO Emanuel Chirico called “the ongoing volatility in the macroeconomic and geopolitical environment.” PVH is also planning to invest an additional $10 million in marketing this year to continue the momentum that’s driving its Tommy Hilfiger and Calvin Klein businesses.
Sales: Consolidated international comparable store sales for the first six months of the year increased 5 percent, and in North America 3 percent. For Calvin Klein, international comp sales were up 6 percent, but in North America sales fell 2 percent owed to the company’s Mexico deconsolidation. International comp sales at Tommy Hilfiger climbed 6 percent and sales in North America also fell, sliding 2 percent.
Earnings: Revenue increased 7 percent to $2.1 billion in the quarter and earnings before interest and taxes jumped to $181 million, a nearly 27 percent increase over the same period last year. At Calvin Klein, revenue in North America fell 1 percent to $392 million and Tommy Hilfiger revenues were down too, to $400 million, a 2 percent decline.
CEO’s Take: Chirico said, “Our better than expected second quarter results reflect the continued momentum and ongoing operating efficiencies across our diversified business model. Our results reflect a planned increase of approximately $25 million of marketing compared to the prior year related to CALVIN KLEIN and TOMMY HILFIGER, which we believe will continue to drive market share gains and allow us to capitalize on the brands’ significant international expansion opportunities over the next several years.”
At the upcoming edition of Sourcing at MAGIC, attendees will be able to witness the factory of the future right on the show floor.Read more
RIS is recognizing several retail software vendors for their ability to transform industry member’s businesses with technology.Read more
The wool market has battled dwindling demand from the infiltration of high-tech fabrics in the outerwear market for many years and lost supply in its home market of Australia, where growers have increasingly opted for more profitable use of their land.Read more
The U.S. Commerce Department issued affirmative final determinations in the countervailing duty investigations of fine denier polyester staple fiber from the China and India.Read more
The cost of enjoying free shipping on Amazon is going up.Read more
GFG named two new co-CEOs, Walmart International named Judith McKenna as its new CEO and a Louis Vuitton veteran announced his exit.Read more
Portugese mill Tintex is switching from the use of conventional cotton and has launched a new fabric range called Naturally Advanced Cotton by Tintex using four different premium and responsibly grown cottons.Read more