The best retailer on Earth reported yesterday, not that anyone cares. I am 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.
Revenues, 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 the 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 who 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.