In today's economy, not losing big seems to equal a 'win' on Wall Street. J Crew reported better-than-expected fourth quarter sales results, despite weak sales and a high inventory. This was deemed positive because the retailer did not loose as much as expected, only reporting losses of $13.5 million (22 cents per share) for the 4Q. Experts say J. Crew stock will bounce after this news, the company notes that further losses are now less likely in the future.
However, J. Crew mostly suffers from its relatively low visibility, causing a subsequent decrease in store traffic and revenue. Also, J. Crew is making an effort to reduce inventory levels as a means of cutting costs for the quarter ahead. This situation, high inventory, will further hurt J. Crew's gross margin, but the retailer plans to ease this pressure by cutting more immediate costs in the areas of selling and administrative costs.
Beyond the stock bounce, J. Crew faces a tough road ahead and faces deep discounting by rivals and the fear of high price points being offset by long-term growth strategies. If they continue to take the necessary steps to improving their cost structure and redirecting their retail strategy, J. Crew could survive the recession.
No comments:
Post a Comment