The Associated Press is reporting that shares of J. Crew Group Inc. hit an all-time low on Wednesday, after the multichannel merchant said second quarter profits were hurt by costs related to problems with an upgrade to its direct channel systems. The company also lowered its yearly outlook due to the problems with the direct platform as well as the weak retail environment.
J. Crew’s stock lost $1.13, or 4.2%, to $25.51 during afternoon trading on Wednesday, after earlier reaching a new low of $23.97. The stock is down 53% since hitting an all-time high of $57.13 in July 2007.
Operating income decreased 15% for a total of $31.5 million. This includes approximately $3 million of unanticipated costs related to its direct channel systems upgrades. The direct systems upgrades impacted the company’s direct sales trend, limited its ability to leverage its multichannel platform, in addition to resulting in incremental expenses.
“We are clearly disappointed by the impact that the transition to our new systems had on our business,” said Millard Drexler, chairman and CEO at J. Crew, said in a statement. “We view this as a short term and temporary issue in continuing to build our long term success.”