Will J.Crew Attract "The New Consumer" {of course!}

A big "thanks!" to Tweedybird, who not only let us know that J.Crew was mentioned in a Barron's article (click here to read it in its entirety), but also scanned the cover of the magazine as well. :)

The New Consumer
By Kopin Tan
June 1, 2009

As the economy improves, consumers will pay a little more to get a little more, including some brands favored by Michelle Obama. Ten stocks that could benefit.

AMERICA'S FLING WITH BLING MAY BE OVER, but the shift to thrift -- brought on by a sagging economy and stock market, and heralded on the cover of Time -- also has gone too far. According to Gallup, the polling organization, Americans cut their daily expenditures by more than 40% in the past year. That's not just fewer lattes; it's muscle and bone.

As savings rise and the market rallies, however, a new consumer is emerging, seeking a sensible middle ground between the gross excesses of the mid-2000s and the privations of the past year. He -- and more often, she -- is likely to find it in companies that offer great products, excellent service and outstanding value, which, by the way, doesn't always mean the lowest price.

Barron's has identified 10 companies that occupy this coveted territory and that stand to prosper as consumers trade up again after a protracted period of trading down: Amazon.com , Apple , Bed Bath & Beyond , Chipotle Mexican Grill , J.Crew Group , Nike , Safeway , Target , Toyota and Urban Outfitters . Not all boast cheap stocks at the moment, but each looks like a long-term winner.

We call this group of 10 the Michelle Index in a nod to America's First Lady, Michelle Obama, whose championing of brands that offer good value reflects a nationwide trend. The honor shouldn't be construed as an endorsement of her politics or her husband's, and we don't even know whether she favors all these concerns. But we do know she's famously fond of J.Crew separates, loads her iPod with Mariah Carey and Stevie Wonder, and has been photographed traipsing across the White House lawn in black-and-pink Nike sneakers. ...

J.Crew Group
J.Crew imposes a modern sensibility on American classics -- like twin sets for women and plaid shorts for men. The result is designer-quality fashion at mid-range prices that has found fans far from preppie redoubts like Nantucket and New Canaan. Is it any wonder that Michelle Obama chose to wear J.Crew on the Jay Leno Show -- the better to press her point about affordable fashion -- after the hubbub over Sarah Palin's whirlwind shopping spree?

Rival Gap (GPS) is cheaper at 14 times this year's expected earnings, and its troubled child, Old Navy, finally looks to be on the mend. But New York-based J.Crew delivers a better retail experience, complete with well-lit stores and impeccable service. And its Website draws 80 million visitors a year.

J.Crew shares shot up 26% Friday, to 26, after the company beat fiscal first-quarter guidance and forecast operating earnings of eight to 12 cents a share, also better than expected. As CEO Millard "Mickey" Drexler said in the earnings release, "there is no choice in this environment than to continue to be creative and figure out where the customer is going, not to respond to where he or she has been."

We couldn't have said it better. ...

Yey for J.Crew! I am thrilled to hear that J.Crew was selected by Barron's as a firm that will perform well during these times. (I am especially happy since I own some stock- which has taken quite a dive since last year!)

What are your thoughts on the article? Disagree or agree on any of the points made? Where there any points that you found particularly interesting?