Ahead of the Bell: Analyst starts J.Crew coverageAssociated Press
September 26, 2008
An analyst started coverage of preppy retailer J.Crew Group with a "Hold" rating on Friday, saying that long-term prospects are good, but inventory is high and domestic consumer spending remains soft.
Jefferies & Co. analyst Randal Konik expects new stores and concepts, such as Crewcuts and Madewell, to drive growth. Long-term, Konik predicts sales growth of at least 10 percent and earnings per share growth near 20 percent.
Konik called J.Crew "a true standout in a dead sea of retail," given a "maniacal" commitment to customer service and product quality that attracts loyal customers.
However, Konik said shares need a catalyst, especially given high inventory, slowing sales and a weak U.S. economy. "Potential positive catalysts of reduced inventories and reaccelerating top-line are likely a few quarters away," Konik wrote.
Konik's $28 price target implies downside of 2.4 percent to Thursday's closing price of $28.69. Shares fell 3 cents in premarket trading Friday.
What are your thoughts on the article? Do you agree or disagree with the "hold" rating? Would you buy, sell, or hold J.Crew stock?
Good Morning Alexis! Is it raining where you are too?
ReplyDeleteSorry to post OT but I want to purchase this but need help making a decision (there's only 4 in FS):
Solid soirée laminated-canvas bag $39.99 item 97151
Would you use this bag during the fall season? It's Bright Rhubarb & is used in the fall clothing. Does this style & color scream spring/summer use only? Thanks any input you are able to provide.
Alexis I am not very knowledgeable about purchasing stock, but I have been contemplating purchasing some in JCrew. If the stock is rated a hold is now a good time to invest in the stock?
ReplyDeleteCould it go down in price further since the article states a turnaround is a few quarters off? I'm definitely interested in reading others input on this topic.
I don't own any J. Crew stock, but I have considered purchasing it.
ReplyDeleteI think "hold" is a good idea not just for J. Crew, but for just about anything. Our country has experience recessions before and we have always come out of them. If you sell now, you will miss out on all the gains when the market goes back up, and then you will be kicking youself in your new Penelope peep toes!
By the way, I just stumbled across your site this morning. I was looking for a promo code for a dress I wanted to buy for a wedding (Matilda Dress in plum). I had it bookmarked, so I didn't see the additional 20% off promo when you enter the sale site. Thanks to that post I got an additional $14 off my purchase! I have bookmarked this site!
If jcrew's web problems persist in the next two months, i would suggest friends selling the stocks. It is not the web problem itself at all. It just says Jcrew's management team can not act effectively when facing challenges.
ReplyDeleteIn addition, Jcrew's performance will be affected by the overall economy. If Jcrew doesn't expand its market to other places less affected, such as China, I will expect its performance going down as other retailers are also heading to.
Anon at 9:21AM: It is suppose to rain (downpour) today. But thankfully it is not raining right now. :) Also, I would totally rock that bag for the fall and winter season. Match that bag with a black fall or winter coat, and it would look great! :)
ReplyDeleteTigs: I own J.Crew stock (and bought it in the high $40's). I actually recommend waiting a bit more. Especially until the holiday season. By then, we will know if J.Crew can handle the holiday orders and how the economy is doing. But again, this is just my personal opinion. :)
I would recommend holding it if you own it and holding off a little longer to buy it, to see if you can get a better deal. Just like JC merchandise, patience will pay off!!! Our economy is going through a rough cycle, but it is just that...a "cycle". Things will turn around in a few quarters, especially after the election. JC has been successful for many, many years and will be around for many more to come.
ReplyDeleteOT: Alexis, have you ever done a post on what "your first JC purchase was"? That might be kind of fun to read, especially for a few of us old timers who have shopping there for years. Just a thought....maybe you've already done this???
I don't currently own any J.Crew stock and won't be buying any in the near future...three months to fix a *glitch* is way too long, IMHO, and hints to deeper issues.
ReplyDeleteI don't currently own JC stock, but considering how poorly my current investments are, it seems like JC might be a worthwhile long term stock...as long as they get their website issues sorted out!
ReplyDeleteAnon @9:21am - love that bag and I totally think you could use it in the Fall and Winter. And it's such a great price!
I own J. Crew stock-I bought it while it was cheap and have already made some money. I'm getting rid of it as soon as I can though.
ReplyDeleterandom question related to Anon 9:21:
ReplyDeleteI've noticed several people mention how many of a particular item are left in stock.
How do you tell?
Thanks!
pixel girl: Type a high amount in the quantity box, and you will get the amount left in stock. (Note this worked for me last weekend and yesterday the amounts were the same as CS).
ReplyDeleteUse this as a guide only who knows what the warehouse has in stock.
Casual-Crew @206:
ReplyDeleteI agree with you. Regardless of what's in stock at the warehouse, I would think JCrew uploads limited quantities to further promote their "hurry up and buy before it's all gone" marketing strategy. Unfortunately for me, I'm a sucker for this strategy when it comes to highly coveted items.
I buy stocks for fun with bonus $ from time to time and believe that it makes sense (especially if you are a small investor like me) to buy companies you know well and love. I bought Starbucks stock 10 years ago and then sold it for a hefty profit when I purchased my house. It was a place that I loved and that was doing well at the time (not so well anymore). I would actually watch J Crew stock now and since we all love it so much won't everyone soon? I also just read the article in Fortune magazine about Mr. Drexler and was very impressed- I believe he really knows what he is doing. Instead of expanding everywhere he is opening different stores to appeal to different buyers. Plus I didn't realize that J. Crew sells almost 10% more online than most comparable retailers-impressive.
ReplyDeleteSo I will be watching the stock and would potentially buy some this Fall
Twiga
I think we have yet to see the fallout from JCrew website upgrade.....If I had their stock I would hold and I would not buy any right now with the state of the economy.
ReplyDelete