UPDATE 1-J Crew cuts profit view on economy, website glitch
(Adds LOS ANGELES to dateline; new throughout)
LOS ANGELES, Aug 26 (Reuters) - J Crew Group Inc (JCG.N) posted a lower-than-expected quarterly profit and cut its 2008 profit forecast again, citing a weak economy and costs related to website glitches, and its shares fell more than 7 percent.
The preppy clothing company run by Wall Street darling and former Gap Inc (GPS.N) CEO Mickey Drexler has seen its value drop by half in the last year after disappointments that convinced investors it was not immune to a U.S. economic downturn.
J Crew said a website system upgrade at the end of June spawned glitches that caused problems with site and call center performance as well as order fulfillment.
"It took us a little by surprise -- the severity of it," Drexler told analysts on a conference call.
He said the company pulled back on marketing the site while it dealt with the problems and worked to soothe upset online shoppers by offering things like free shipping.
Company executives told analysts in a conference call that they expect to have their online systems and operations stabilized in the current quarter.
J Crew said the technology problems, which hurt sales and margins in the second quarter and drove inventories higher, also caused the company to delay the launch of Madewell.com, an Internet site for J Crew's new upscale brand.
Second-quarter net income fell 12 percent to $18.1 million, or 28 cents per share, from $20.6 million, or 32 cents per share, a year ago.
Excluding about $3 million of unanticipated costs from the glitches, J Crew's profit per share came to 31 cents per share, below the average analyst forecast of 32 cents, according to Reuters Estimates.
The company forecast third-quarter earnings per share of 28 cents to 33 cents and cut its full-year earnings view for the second time this year to a range of $1.44 to $1.54 per share from a previously expected $1.70 to $1.75 per share.
Shares in J Crew, which were trading at above $50 a year ago, fell to $24.63 from their close of $26.64 on the New York Stock Exchange. (Reporting by Lisa Baertlein; Editing by Braden Reddall)
