J. Crew Goes Public

New York-based apparel cataloger/retailer J. Crew Group began trading on the New York Stock Exchange on June 28. Its initial public offering of 18.8 million shares of common stock was priced at $20 per share. The company is trading under the symbol “JCG”.

J. Crew turned in a profitable fiscal 2005. Sales for the year grew 19%, to $953 million, up from $804 million in 2004. What’s more, the company posted net income of $4 million, a turnaround from the $100 million loss ($50 million of which had resulted from financing of debt) it reported the previous year. Stores sales increased 16%, to $670 million, with a comparable store sales increase of 13%. Direct sales rose 28%, to $254 million. Gross margin for the year increased to 42%, from 40% the previous year, due to higher full-price sell-through during the first half of the year. Operating income soared 105%, to $80 million from $38 million.

J. Crew expects to receive net proceeds of approximately $351.6 million from the offering and plans to use those funds—along with an additional $73.5 million from the private sale of common stock to the company’s largest shareholder, private equity firm Texas Pacific Group and cash on hand of $8.4 million—to redeem the company’s preferred stock. If the underwriters opt to buy additional shares, the company intends to use the additional net proceeds of approximately $49 million to pay down borrowings under its term loan.