New York-based multi-channel retailer J. Crew Group, Inc. (JCG) revised its guidance for the third quarter, reflecting stronger-than-anticipated sales and margin trends. Following the news, J. Crew shares are trading up more than 12% on the New York Stock Exchange.
For the third quarter, J. Crew currently expects earnings in the range of $0.54 - $0.59 per share, compared with previous expectation of $0.30 - $0.33 per share.
On average, 21 analysts polled by Thomson Reuters expected the company to earn $0.36 per share for the quarter. Analysts' estimates typically exclude special items.
J. Crew said third-quarter expectations reflect a high single-digit increase in comparable store sales versus previous guidance of a mid single-digit decline in comparable store sales. It reflects a low single-digit increase in Direct sales versus a low to mid-single-digit decline in Direct sales for the year-ago period.
J. Crew also said that the raised guidance reflects a gross profit margin increase of around 500 basis points compared with the prior-year period, and a 100 basis point increase in gross profit margin over previous guidance.
For the fourth quarter, J. Crew currently expects comparable store sales to increase in the mid-to-high single-digit range and Direct sales to increase in the low single-digit range, as compared with the fourth quarter of fiscal 2008.
Gross profit margin expectations remain consistent with previous guidance of a 600 basis point sequential decline from actual third-quarter results to fourth quarter, the company said.
This revised outlook compares to its previous outlook for the fourth quarter of fiscal 2009 of a low single-digit increase in both comparable store sales and Direct sales.
J. Crew said its expectations for the fourth quarter are based on the view that current trends in the third quarter would continue, however, there can be no assurance that they would occur.
In August, J. Crew reported a marginal second-quarter profit on 6% higher revenues, with net income of $18.61 million or $0.29 per share compared with $18.12 million or $0.28 per share in the year-ago quarter.
Second-quarter store sales, including both Retail and Factory, increased 7% to $259.1 million, with comparable store sales decreasing 5%. Direct sales increased 6% to $88.2 million, compared to $83.2 million in the second quarter of prior year. Gross margin increased to 41.2% of revenues from 41.0% of revenues in the same period last year.
JCG is currently trading up 14.31% at $43.14 on the NYSE, higher $5.40.
For comments and feedback: editorial@rttnews.com