J.Crew Highlights of 2nd Quarter Fiscal 2009 Results

J.Crew released today their second quarter fiscal results (click here), the following are some interesting financial figures :

• Revenues increased 6% to $357.6 million. Store sales (Retail and Factory) increased 7% to $259.1 million, with comparable store sales decreasing 5%. Comparable store sales decreased 0.4% in the second quarter of fiscal 2008. Direct sales (Internet and Phone) increased by 6% to $88.2 million. Direct sales increased 12% to $83.2 million in the second quarter of fiscal 2008.
• Gross margin increased to 41.2% of revenues from 41.0% of revenues in the second quarter of fiscal 2008.
• Operating income increased 2% to $32.2 million, or 9.0% of revenues, compared to $31.5 million, or 9.4% of revenues, in the second quarter of fiscal 2008. Operating income in the second quarter of fiscal 2009 includes charges of approximately $2.6 million related to underperforming stores and lease termination actions.
• Operating income in the second quarter of fiscal 2008 included approximately $3.0 million of costs related to our Direct channel systems upgrades.
• Net income was $18.6 million, or $0.29 per diluted share, compared to a net income of $18.1 million, or $0.28 per diluted share, in the second quarter of fiscal 2008.

J.Crew's Chairman and CEO, Millard (Mickey) Drexler, also shared: "We are and have been on a long term mission to be recognized for our quality, style, design and service. This mission puts 'taking care of our customers' front and center in every part of our business -- our products, our service, our store environments and our web site. While we are pleased with our second quarter results, we always have our eye on where our customer is headed and the need to constantly challenge ourselves to be creative and innovative."

There is also a conference call today. The following are some highlights that are interesting to share:

• Pleased with better than expected 2nd quarter results
• Madewell is viewed as a long-term opportunity, plans to launch an e-commerce site in 2010
• Mickey believes J.Crew is recognized for quality, design, & service, and is striving to make customers "front and center"
• Mickey stated they are "willing to go above and beyond for our customers"
• Want to develop personal relationships with every customer; Will answer their customers' emails at all hours of the day
• Customers are looking for a unique product they connect to emotionally, at a good value
• Customers come back to regular price when they like the product & merchandise
• J.Crew is testing more with niche mailings to customers (e.g. emails to women, catalogs to men)- will stop at nothing to give quality to customers; So trying to show strength & communicate it to customer (which is done through catalogs and online)
• Invested a lot in marketing (catalogs, mailings, etc.), even advertising in the New York Times, to get customers to come
• Have some must have items for Fall (like Boyfriend Blazer, Shoe-boot, skinny pant, ruffle camis, art tees, and more)
• Conservative with planning inventory levels this season, and will continue to do so
• Won't give numbers of how much is sold during 1st, 2nd, & 3rd markdowns
• Not in the business for markdowns; want to plan, buy, & invest right
• Know there's an expiration date for all the merchandise they buy; for example they expect that after Dec 23rd, everything is worth half than the day before
• People have good memories & will expect good sales during December

To read the transcript of the conference call in its entirety, click here.

What are your thoughts on J.Crew's results and/ or any of the points above? :) What do you think J.Crew should do next?