J. Crew Shares Up 28% in NYSE Debut
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J.Crew Group Inc.’s initial public offering debuted with style yesterday, posting a double-digit percentage gain on its first day of trading.
The New York clothing retailer’s stock closed at $25.55 a share on the New York Stock Exchange, up 27.8% from its IPO price of $20. J. Crew sold 18.8 million shares at a price above its expected $15 to $17 range, which was set by underwriters Goldman Sachs Group Inc. and Bear Stearns Cos.
Retail store IPOs have averaged firstday trading gains of 13.5% since 2005, according to data tracker Dealogic, putting J. Crew’s initial performance ahead of most of its peers. Its $376 million IPO is also larger than the norm for apparel retailers, ranking as the second-biggest to list on the NYSE, after Gucci Group’s dual-listing in 1995 raised $619 million, says Dealogic.
J.Crew,which operates 164 retail and factory outlet stores in America, also sells its clothes via catalog and on its Web site, JCrew.com. The company plans to add 15 to 30 new stores in its fiscal year ending in January, and aims to open 25 to 35 stores annually after 2006.
Private-equity specialist Texas Pacific Group, which acquired a majority stake in the company in 1997, will continue to own 40% of it after the IPO. Texas Pacific didn’t sell any of its shares in the IPO; in fact, it bought $73.5 million of additional stock at the IPO price.
J. Crew has had eight consecutive quarters of comparable-store sales growth, with the most recent growth pegged at 12%. For the 13 weeks that ended April 29, revenue rose 14% to $240.7 million, and net income increased 59% to $7.8 million, compared with the same period a year ago.
For the 12 months that ended January 28, revenue rose 18.5% to $953.2 million, compared with its previous fiscal year. The company reported net income of $3.8 million in 2005, compared with a net loss of $100.3 million the previous year. Profit improved in the last fiscal year due to higher revenue, a decrease in interest expense, and a debt refinancing in the previous year that resulted in a charge that year.
