Inside J Crew's Lower Revenue Expectations

| About: J CREW (JCG)

J.Crew Group (JCG) is a specialty retailer selling women’s, men’s and children’s apparel and accessories under the J.Crew, crewcuts and Madewell brands. It competes with Aeropostale (NYSE:ARO), American Eagle Outfitters Inc. (NYSE:AEO), AnnTaylor (NYSE:ANN), and Gap Inc. (NYSE:GPS). We currently have a Trefis price estimate of around $42 for J.Crew Group’s stock, about 15% above the current market price of close to $37.

Trefis members have created forecasts for two key drivers of J.Crew Group’s stock over the last week: (1) Revenue per Square Foot for J.Crew Stores and (2) Number of J.Crew Stores. The member’s forecasts suggest that Revenue per Square Foot for J.Crew Stores will trend slightly below the Trefis forecast.

We estimate that J.Crew In-Store Women’s and Men’s Apparel together constitute around 42% of J.Crew Group’s stock. Hence the stock is quite sensitive to (1) Revenue per Square Foot for J.Crew Stores and (2) Number of J.Crew Stores. Below are charts showing recent estimates created by Trefis members for the two drivers in detail.

1. Revenue per Square Foot for J.Crew Stores

The average of forecasts for Revenue per Square Foot for J.Crew Stores created by Trefis members indicated a projected increase from $574 in 2010 to around $682 by the end of the Trefis forecast period, compared to the baseline Trefis estimate of an increase from $589 in 2010 to around $702 by the end of the Trefis forecast period. The member estimates imply a downside of 1% to the Trefis price estimate for J.Crew Group’s stock. In the past, Revenue per Square Foot for J.Crew Stores has increased from $397 in 2004 to around $531 in 2009.

You can drag the forecast trend-line above to express your own view, and see the sensitivity of J.Crew Group’s stock to Revenue per Square Foot for J.Crew Stores.

2. Number of J.Crew Stores

The baseline Trefis estimate projects an increase from around 347 in 2010 to around 406 by the end of the Trefis forecast period. In the past, Number of J.Crew Stores has increased from 197 in 2004 to 321 in 2009.

You can drag the forecast trend-line above to express your own view, and see the sensitivity of J.Crew Group’s stock to Number of J.Crew Stores.

Disclosure: No positions