J. Crew beats Street, shares jump

By Alexandria Sage

LOS ANGELES (Reuters) - Apparel retailer J. Crew Group Inc (JCG.N: Quote, Profile, Research, Stock Buzz) posted a surprising 21 percent rise in revenues and net profit above Wall Street's expectations on Thursday, while a raised outlook for the full year sent shares up over 10 percent.

A focus on unique fashions for a more affluent customer at J. Crew stores, catalog and online businesses kept revenue robust, the company said, during a pre-holiday quarter marked by uneven consumer spending for other American retailers.

Net income in the third quarter increased to $26.8 million, or 42 cents per share, from $26 million, or 40 cents per share, a year earlier, when the company's tax rate was significantly lower.

Analysts, on average, had expected earnings of 36 cents, according to Reuters Estimates.

Sales rose to $332.7 million, the company said, well ahead of a Wall Street consensus view of $312.7 million.

Same-store sales, a key gauge of retail performance that measures sales at established stores, rose 8 percent in the quarter, while sales through the company's catalog and Web site rose by 36 percent, the company said.

The effective tax rate in the quarter was 39.8 percent compared with 7.1 percent a year earlier.

Higher-than-expected sales, together with better leverage from selling, general and administrative expenses, helped drive a 44 percent increase in operating income, while improving operating profit margins to 14.3 percent of revenues from 12 percent a year earlier.