J. Crew's dynamite retail magic

Competitors can only marvel at this winner's simple formula: Sell tons of products people want while maintaining good service and low costs.

By Jim Cramer Aug 30, 2012 9:32AM

TheStreet.comThe best retailer on earth reported Wednesday. Not that anyone cares. I'm talking about the amazing numbers from privately held J. Crew (which, actually, have yet to be reported because of some public debt that was sold to finance the buyout). They are breathtaking.

 

Revenue, up 21%. Same-store sales? Plus 14%. Gross margins, 45.1% -- up from 36%. SGA? Roughly flat.

 

That's it. Those are the line items by which we judge retail, and I have to tell you that, other than Mickey Drexler, no one is putting up these numbers. Sure, Ross Stores (ROST) and TJX Companies (TJX) are doing quite well. I like how Target (TGT) is performing. Limited Brands (LTD) is no slouch. Nordstrom (JWN) and Macy's (M) keep performing well.

 

But these J. Crew numbers tell you that you can shoot the lights out in this environment and it can be done simply by being a better merchant and doing a better job at actually retailing than anyone else.

 

Just for a moment, let's contrast this plus 14% comps with the minus 19% comps that everyone's been gaga over at J.C. Penney (JCP), courtesy of CEO Ron Johnson, who was once the colleague of Drexler on the board of Apple (AAPL).

 

Other than the chart, which, alas, is breaking out, as people have told me endlessly: What has Johnson done for you? Cut the dividend? Stretched the balance sheet? Driven away customers? Made bold predictions that haven't been lived up to? Spent millions of dollars in unhelpful advertising?

 

Hey, if those are good things, let's take that sucker to $30 pronto. But they aren't.

 

I have made a study of retailing all of my life, courtesy of my father's business of selling boxes and bags to retailers for 55 years. I have seen literally thousands of them come and go. I have seen the precious few that have made it. The winners all have the same formula: explosive sales of products people want, with good service, low costs and excellent inventory controls. These constants happen whether the economy is good, or, as we know now, the economy is gloomy and uncertain.

 

It's the CEO. It's the management. Crew has it.

 

The others? They can only marvel at it.

 

 Jim Cramer

 

Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust and is long AAPL.

 

 

 

More from TheStreet.com

7Comments
Aug 30, 2012 12:44PM
avatar
May they never divulge the secret, Jim. In a world where somebody's idea of "talent" involves sending jobs overseas, buying way too much of the same thing and competing by seeing who drive prices to zero first and calling it unit productivity... ACTUAL retail skills are sorely lacking. I give J. Crew a lot of credit for learning it's customer, maintaining quality and affordability and staying away from cheap imitation facsimiles of past successes and trailer trashy fashions.
Aug 30, 2012 12:13PM
avatar

JUDGING FROM THE LACK OF COMMENTS, THE WORD IS OUT ON THIS CROOK.......

MAY HE JOIN MADOFF,  MOZILO, AND COMPANY IN JAIL 

Aug 30, 2012 11:07AM
avatar
YOU ARE SO RITE ON JIM, MUCH RESPECT FOR YOU MAN.
Aug 30, 2012 3:55PM
avatar

talent in capitalist business is a few at the top making millions off the backs of the workers

whom they pay pennies...........hardly talent to benefit at others expense

Aug 30, 2012 3:52PM
avatar
they allow a scam like cramer so they're not picky
Aug 30, 2012 1:23PM
avatar
Why doesn't  MSN have an effective spam guard??? Lots of  outrageous trash here, so it really makes me suspect that MSN is getting paid to allow it.

Short term thinking for sure, as if it continues I am gone. And then another reader, and potential buyer of site-advertised products, is gone. Surely more money in ads than in allowing spam.

Nice work, Microsoft.

Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

118
118 rated 1
270
270 rated 2
472
472 rated 3
714
714 rated 4
624
624 rated 5
608
608 rated 6
623
623 rated 7
445
445 rated 8
319
319 rated 9
125
125 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
AAPLAPPLE Inc10
ATVIACTIVISION BLIZZARD Inc10
BIDUBAIDU Inc10
BMYBRISTOL-MYERS SQUIBB CO.10
CELGCELGENE CORP10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.