By  on March 9, 2010

J. Crew Group Inc. reversed a fourth-quarter loss with a higher-than-expected profit on a double-digit sales gain.

The New York-based specialty retailer also projected 2010 earnings above the current consensus estimate.

For the three months ended Jan. 30, earnings were $40.4 million, or 61 cents a diluted share, against a loss of $13.5 million, or 22 cents a diluted share, in the same year-ago period. The consensus among analysts polled by Yahoo Finance was for earnings per share of 46 cents.

Total revenues rose 18.7 percent to $460.6 million from $388.0 million a year ago. Store sales jumped 23.4 percent to $311.1 million, including a 17 percent upswing in same-store sales, as direct-to-consumer sales increased 13.2 percent to $139.2 million.

Gross margin catapulted to 43.9 percent of revenues from 27.6 percent in the final quarter of fiscal 2008.

For the year, income more than doubled to $123.4 million, or $1.91 a diluted share, from $54.1 million, or 85 cents, in 2008. Total revenues rose 10.5 percent to $1.58 billion from $1.43 billion, which included a total sales gain of 11.3 percent to $1.54 billion from $1.38 billion.

Millard “Mickey” Drexler, chairman and chief executive officer, told analysts on a conference call that, after pulling back expansion plans last year, the retailer will open 15 stores in 2010, and will be positioned to ramp up unit growth in 2011. The company is “looking at real estate much more seriously again for growth.” One of the openings this year is its first wedding shop, on 66th Street and Madison Avenue in New York, which, opening this summer, will serve as the platform for J. Crew’s wedding business.

The ceo also said there’s an opportunity for the firm in its factory outlet business, which he classified as “highly productive,” as well as in the Crewcuts concept for kids.

Drexler later told WWD that, with 244 stores and 79 outlets, the specialty chain was nowhere near the maximum number of stores for any of its concepts. “Wherever is the right location and where the deal comes up, we’re very flexible,” he said, adding the firm is open to “any good street, any good mall.”

He said the company sees a maximum of 300 J. Crew stores, versus the current 218, and 100 sites for its factory locations. Madewell, with 17 sites, still has room for growth. The number of stores for Crewcuts is less important, compared with opportunities to sell through its Web site and online catalogue, Drexler said.

Drexler said on the conference call that the Madewell business performed better than expected last year. As a continued sign of the firm’s caution, he told analysts, “Until we see [Madewell] start to contribute to earnings, it’s not going on top of our list.” However, he did note Madewell’s potential and that so far the indications are good, with women buying boots, accessories and scarves, in particular.

He assured analysts, “We will always continue to invest in creativity and innovation in our products, our people, our catalogues, our stores and online. Our goal is to connect emotionally with each and every one of our customers and each and every one of our associates.”

The company said it expects first-quarter earnings in the range of 48 cents to 53 cents a diluted share, and fiscal 2010 EPS between $2.20 and $2.30, above the analysts’ consensus estimate of $2.13.

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