Mickey Drexler Eyes Comeback

J. Crew's IPO would bring the Gap exec back to public markets.
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Papers filed late Wednesday with the

Securities and Exchange Commission

indicated the Mickey Drexler, the fashion guru who built the

Gap

(GPS) - Get Report

into a retailing giant, will get a second crack at running a public company.

Adding to the recent buzz around the IPO market,

J. Crew Group

, where Drexler now serves as chief executive, said it will launch an initial public offering that's expected to raise around $200 million. The move could mark the beginning of the end of a successful turnaround for Texas Pacific Group, the private equity firm that bought a controlling stake in J. Crew in 1997.

J. Crew, which operates around 200 stores in the U.S. and a prolific Internet and catalog business, plans to apply for a listing on the

New York Stock Exchange

under the ticker symbol "JCG." It will use the money raised by the offering primarily to pay down debt.

Texas Pacific Group will buy $73.5 million worth of common shares. The firm has a 51% stake in the company, while J. Crew's founder, Emily Scott, has a 16% stake. Drexler is the next largest shareholder, with a 15% stake.

J. Crew also said it has hired former

Saks

(SKS)

executive James Scully as chief financial officer, succeeding Amanda Bokman, who recently resigned.

Texas Pacific Group hired Drexler in 2003 after he left the Gap in the midst of a sales and earnings slump at the pioneering specialty retail chain. His successor, former

Disney

(DIS) - Get Report

executive Paul Pressler, succeeded in reversing 28 months of falling same-store sales at the Gap and fattened margins that had shrunk 13 percentage points to 2.4% in the space of a decade. He also trimmed the company's balance sheet back into shape, restoring its investment-grade credit rating.

J. Crew has suffered losses in four of the past five years, but under Drexler, the company posted a profit in its last 13-week period. It reported earnings of $4.9 million, compared with a loss of $23.8 million in the same period last year. Its net sales in 2004 rose 17% to $804 million.

The company is a growing competitive threat in the specialty apparel space that includes Gap,

Limited

(LTD)

,

Abercrombie & Fitch

(ANF) - Get Report

and

American Eagle Outfitters

(AEOS)

. Its chief competitor as a cataloguer is Land's End, which is owned by

Sears Holdings

(SHLD)

.

Ken Perkins, president of Retail Metrics, said the market has been anticipating a J. Crew IPO for some time now.

"It's a premium name in retailing," Perkins said. "It's not going to be anything like

Google

(GOOG) - Get Report

, but as far as recent retail IPOs go, I think this one should generate a fair amount of buzz in the stock market."