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J. Crew's Sharp Showing Boosts Shares

Updated from May 31

Another strong earnings report from J. Crew (JCG) sent shares of the preppy-apparel retailer surging Friday.

The company said late Thursday that first-quarter earnings vaulted from a year ago and handily topped estimates, driven by big gains in sales at its established stores. J. Crew also boosted its guidance for the full year.

Shares were climbing $4.31, or 9.6%, to $49.18 on more than four times their average daily volume.

The New York-based company earned $24.6 million, or 39 cents a share, in the first quarter. That was up from the profit of $4.4 million, or 12 cents a share, a year ago, when results included about $9.8 million in one-time items.

Revenue surged 24% to $297.3 million.

Analysts surveyed by Thomson Financial had expected the company to earn 30 cents a share on revenue $271.1 million.

At J. Crew's retail-store division, same-store sales, or sales at stores open at least a year, jumped 13%. When adjusting for changes in the retail calendar, comps increased 8%. Total store revenue rose 20% to $201 million.

Direct sales, which includes results from catalog and Internet sales, rose 31% to $86.6 million.

Margin improvements also helped boost the bottom line, with gross margin increasing to 46.6% of revenue from 45.5% last year.

"We are pleased with our first quarter results which reflect the hard work of our team in always doing our best to satisfy our customers," Millard Drexler, J. Crew's chairman and CEO, said in a statement.

The company said its long-term annual financial targets include comp sales growth in the mid-single-digit range and EPS growth of more than 20%.

During a conference call, the company increased its full-year guidance to a range of $1.37 to $1.41 a share, up from a previous range of $1.27 to $1.31. Wall Street is expecting earnings of $1.32 a share. J. Crew also said it expects second-quarter earnings of 26 cents to 28 cents a share. Analysts are looking for 28 cents.

The earnings beat is just the latest for J. Crew, which has topped estimates in each of its reported quarters since going public last June. Since the IPO, shares of the retailer have more than doubled from their $20 offering price.

Much of the company's success has been attributed to Drexler, the retail expert who gained notoriety by building Gap (GPS) into an empire.

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