J. Crew's 3Q Falls Short

Goldman Sachs has published a research report on J. Crew Group (NYSE: JCG) after the company reported 3Q results that caused Goldman Sachs to lower 2010 year end estimates.

In the report, Goldman Sachs writes "JCG delivered on bottom-line expectations for 3Q via SG&A reductions, but lowered its 4Q and FY outlook. 3Q EPS of $0.58 beat GS/FC of $0.55/0.54 thanks to a 2% decline in SG&A that offset a 460bps decline in gross margin (steeper vs. original guidance of 250-350bps decline). The primary driver was promotions as a result of weak response to women's product and heavy inventories (+12% vs. 3Q sales +4%). Looking ahead, this weakness is expected to persist into 4Q, and the company expects sequential weakening for 4Q (gross margins down 600-700bps vs. -490bps in 3Q; comps down low single digit vs. -1% in 3Q). The 4Q outlook brought FY2010 guidance down to $2.08-2.13 from $2.22-2.25 (FC currently $2.24)."

Goldman Sachs has no rating or price target for J. Crew Group, which closed yesterday at $43.99.