J. Crew (NYSE:JCG) hasn't been high on my list of retail ideas, but I'm beginning to wonder if my previous hesitation about this stock was just plain wrong. J. Crew reported very impressive first-quarter earnings last week.

The preppy retailer reported that its first-quarter net income more than tripled to $24.6 million, or $0.39 per share. Revenue increased by 24% to $297.3 million, with same-store sales up 13%. J. Crew was also able to increase its gross margin by 110 basis points, to 46.6% of sales from 45.5% of sales. Needless to say, J. Crew also upped its guidance, which probably helped galvanize investors on the stock.

Part of my previous issue with J. Crew was that it had a pretty hefty amount of debt; interest expense this quarter was only $3.4 million, as opposed to $19.2 million this time last year. J. Crew management said in its conference call that the discrepancy in this expense reflects the company's post-IPO capital structure as well as lower interest rates on the debt and the fact that it has paid down the debt. The IPO funds certainly have helped in that regard -- J. Crew's debt clocks in at $175 million now, compared to $740 million last year.  

Another problem I've always had with J. Crew is that, despite its strong brand, its preppy wares didn't seem very differentiated. Other companies aim for the same type of customer, like Abercrombie & Fitch (NYSE:ANF) and American Eagle Outfitters (NYSE:AEO). On the other hand, J. Crew is carefully plotting and planning its progress with new concepts, such as Crew Cuts, a store for J. Crew preps of the childish persuasion. There's also Madewell, a new concept the company is slowly rolling out.

Of course, J. Crew does have an interesting factor going for it -- it's headed up by someone many people would consider a real expert merchant, Millard (Mickey) Drexler. He's often been saddled with a reputation for overexpanding and overextending his last retail gig, Gap (NYSE:GPS), but it's not hard to see that Gap went too far in the other direction over the last couple years under different leadership, losing its brand's sparkle and panache. Given the comparison, one might wonder who's laughing now. A peek at J. Crew's conference call does give the impression of a company with leadership that's well aware of how to keep the brand's integrity and what its customers want.

I still feel hesitant about the idea of investing in J. Crew; trading at 31 times next year's earnings sounds awfully pricey for a retailer that I still think has some obstacles. However, I have to admit, so far my pessimism on this retail stock seems to have been unfounded.

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Alyce Lomax does not own shares of any of the companies mentioned. The Fool has a disclosure policy.