Operating income at US based apparel marketer J.Crew Group crashed to $2.6 million in the second fiscal quarter ended August 1, 2015, massively down from $36.0 million in the prior fiscal second quarter.
“Operating income in the second quarter this fiscal includes a charge of $4.5 million for severance and related costs associated with our workforce reduction in June 2015,” the company explained in a press release.
Total revenues too decreased 5 per cent year over year to $593.6 million in the reporting quarter, while comparable company sales dipped higher at 11 per cent as against a 4 per cent hike in last fiscal's same quarter.
Of which, J.Crew sales brand sales fell 10 per cent from the fiscal ago period to $506.5 million, while its comparable sales declined 13 per cent following an increase of 3 per cent in the second quarter of last fiscal.
However, Madewell brand sales surged 22 per cent to $67.9 million in the second quarter of fiscal 2016 and its comparable sales grew 8 per cent, as against a 17 per cent rise in the same quarter of earlier fiscal.
The apparel marketer said its gross margin stood at 34.3 per cent for the quarter under review, down from 37.6 per cent in the second quarter of fiscal 2015. .
Selling, general and administrative expenses were comparatively flat at $199.8 million, or 33.6 per cent of revenues compared to 31.9 per cent of revenues in the same quarter of previous fiscal.
Net loss too rose higher at $13.6 million vis-à-vis net income of $10.8 million in the second quarter of last fiscal.
The company experienced a further significant reduction in the profitability of its J.Crew reporting unit, primarily driven by performance of women's apparel and accessories.
CEO Millard Drexler said, "Entering fall, we feel good about the assortments in stores and online, which reflect more emphasis on the key product categories that our customers love J.Crew for.”
“At the same time, our team has taken a hard look at the business and made changes to drive greater efficiency and profitability,” he added.
“We are focused on our performance in the second half of the fiscal and positioning the business for sustained growth," Drexler informed.
Cash and cash equivalents at the end of the second quarter of fiscal 2016 were $41.4 million as against $73.5 million at the end of the corresponding quarter last fiscal.
J.Crew further added that the second quarter this fiscal reflects the payment of a dividend of $19 million to fund the semi-annual interest payment due November 1, 2015.
