J. Crew decline accelerates

J. Crew's troubles showed no sign of easing in the first quarter as the retailer posted its 11th consecutive quarter of same-store sales declines.



Total sales fell 6.3% to $532 million in the quarter, ended April 29. Total same-store sales fell 9%.



By brand, J. Crew sales decreased 11% to $428.5 million; same-store sales fell 12%. Madewell sales increased 17% to $84.7 million; same-store sales increased 10%.



The retailer reported a net loss of $123.3 million for the quarter, compared to a $8 million loss last year. The loss reflects the impact of a non-cash impairment charge of $129.8 million related to the intangible asset for the J.Crew trade name. Operating losses widened to $153 million from a little over $7 million last year



Last week, J.Crew announced that CEO and chairman Mickey Drexler would be stepping down as chief executive after 14 years in the role. Drexler, who will remain as chairman, will be succeeded by West Elm CEO Jim Brett. Earlier in the year, the retailer announced that its its longtime creative director and muse, Jenna Lyons, was leaving.



Neil Saunders, managing director, GlobalData Retail, is not impressed by the changes at the top. "Overall, we believe the company is in a parlous state," he commented. "In this context, recent management changes appear to be little more than rearranging deck chairs on the Titanic. There is always an argument for change, but change by itself is neither a strategy nor a solution -- it needs to be accompanied by a blueprint for reinventing the business."



In a statement announcing the quarterly results, Drexler expressed optimism about the chain's efforts to improve its business.



"We have a clear vision and action plan in place to meet our customers' needs - wherever and however they choose to shop," he said. "I look forward to transitioning my role to chairman and to working with our new CEO, Jim Brett, as he takes the reins in July and continues to position J.Crew for long term success."



In a separate announcement, J. Crew announced it has launched a debt swap. It is offering to exchange its $566.6 million of outstanding pay-in-kind notes due 2019. At least 95% of bondholders must accept for the proposal to proceed.