By  on August 18, 2005

NEW YORK — J. Crew Group, speeding up its timetable for going public, filed a registration statement with the Securities and Exchange Commission Wednesday for an initial public offering of as much as $200 million in common stock.

The timing of the IPO may have been accelerated because of the successful turnaround of the retailer orchestrated by Mickey Drexler, chairman and chief executive officer, and president Jeff Pfeifle. The company has been on a roll for more than a year. In addition, many investors have money to burn and are looking for hot properties.

Analysts speculated that J. Crew, which is controlled by the private equity firm Texas Pacific Group, could go public within 60 to 90 days, depending partly on the complexity of the registration statement and J. Crew's financials. Specifics about the stock price were not disclosed.

The announcement confirmed published reports that an IPO was in the works, though the expectation was for it to happen next spring.

From 2003 to 2004, the company increased revenues to $804 million from $690 million and went from an operating loss of $31 million to an operating profit of almost $38 million. For the 13 weeks ended May 1, revenues increased to $211 million from $146 million compared with the same period a year ago.

However, interest expenses related to debt have kept net income down. There is $682 million in debt and preferred stock. There was a net income loss of more than $100 million last year, though in the first quarter of this year the company turned a net profit of $4.9 million against a net income loss of almost $24 million in the year-ago period.

"There is still a long way to go," to pump up the balance sheet, said a financial expert, who spoke on condition of anonymity.

J. Crew said that it would use the proceeds of the offering, along with the cash from a sale of $73.5 million of its common stock to Texas Pacific Group, and borrowings under an anticipated term loan to redeem outstanding cumulative preferred stock and some debt and to pay related costs.

"This could be an extremely attractive stock, if it's priced right," said Gilbert Harrison, chairman of Financo Inc. "Mickey Drexler has done a phenomenal job in terms of repositioning the brand and bringing J. Crew back to its roots."Another source said the company has to be careful not to price the stock too high. "If they price it at $30 a share and it's really worth $25 a share, there could be problems. If it's priced too high, the public won't buy."

Typically, investors examine the potential growth of the company and how it is performing to get a sense of the stock's worth.

"J. Crew will go through a totally thorough review by the SEC," Harrison said. The registration statement is 97 pages long.

"I think the merchandise is great, and I've spent a lot of time in their stores lately," said Jennifer Black, of Black & Associates. "The merchandise has such a cohesive feel, even though the J. Crew stores and catalogues offer a lot of categories. Everything goes with everything."

J. Crew officials declined to comment beyond the company's announcement, which did not offer a time frame for going public.

The sale of common stock to Texas Pacific Group is contingent upon the completion of the initial public offering and the redemption of the company's preferred stock.

Proceeds from going public could also be used to grow J. Crew's retail operations. With 157 retail stores and 43 outlets, there is room for growth, and executives have said there could be about twice as many retail stores. The company also sells via its catalogues and online.

The offering is being underwritten by Goldman, Sachs & Co. and Bear, Stearns & Co. Inc.

J. Crew has cut costs by creating a leaner organization at the New York headquarters, which is down to 400 employees from 600 and two floors from three. Drexler and Pfeifle came from Gap Inc. to J. Crew in February 2003.

Before the turnaround, the company had been faltering for more than five years, delivering poor returns for Texas Pacific Group, which purchased majority ownership in 1997. Amid declining sales and profitability, the equity firm put off the public offering.

"A lot of chains get very big, very quickly, then hit a wall," Pfeifle said a year ago. "We don't want to get very big, very quickly."The more pressing objective was to drive up the productivity of the existing stores, as well as the catalogues and online business, he said.

There also are higher prices and a better-edited assortment, and none of the cheaper and poor-fitting clothes of the past.

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