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J. Crew prices IPO at $20, above forecast

NEW YORK, June 27 (Reuters) - Preppy retailer J. Crew Group Inc. priced an initial public offering on Tuesday worth $376 million, according to an underwriter.

The 18.8 million share offering, which represents about a 33 percent stake, sold for $20 a share, above a $15 to $17 forecast.

The $20 price will give the company an initial market capitalization of more than $1.1 billion.

Investors clearly looked favorably on J. Crew's successful first quarter, which is traditionally the company's worst, said IPO analyst Francis Gaskins.

The New York-based company said first-quarter revenue jumped to $240 million, up 14 percent from a year earlier, as it continues to rebound from the maladies now plaguing Gap Inc. (GPS.N: Quote, Profile, Research) -- merchandise missteps and declining sales despite rapid store growth.

"Sometimes when the market is difficult, there are buying opportunities for high quality income statements," Gaskins said. "This may be one of them."

At $20, J. Crew is trading at 14 times past earnings, while rivals Gap and Limited Brands (LTD.N: Quote, Profile, Research) are trading at nearly 15 and 25 times past earnings, respectively, for the quarter ending April 29.

J. Crew began in 1983 as a mail-order business, and is known for casual men's and women's clothing and accessories that it sells in stores, catalogs and online.

Texas-Pacific Group bought J. Crew in 1997 and is expected to own as much as 40 percent of the company after the offering, according to its filing with the U.S. Securities and Exchange Commission.

J. Crew opened six stores in fiscal 2005 and plans to open 15 to 30 stores in fiscal 2006. After that, it plans to open between 25 and 35 stores annually, the filing said.

The company plans to use the proceeds for general corporate purposes and to pay down debt.

Goldman Sachs and Bear Stearns are the lead underwriters on the deal.

J. Crew aims to list its shares on the New York Stock Exchange under the ticker symbol JCG (JCG.N: Quote, Profile, Research).