J. Crew Group Inc. stock jumped 8 percent Wednesday after the preppy clothing retailer reported a lower-than-expected fiscal fourth-quarter loss.

The New York-based company with 10 locations in Chicago attributed the loss of $13.5 million, or 22 cents per share, to weak sales and high inventory for the quarter ended Jan. 31. This compares with earnings of $25 million, or 39 cents per diluted share, for the same period last year. Analysts polled by Reuters had expected a loss of 27 cents per share.

Revenue for the fourth quarter was $388 million, down 3 percent from $400 million in the year-ago period. Analysts polled by Reuters had estimated revenue of $373 million.

“Fourth quarter was how low it can go, and it was almost embarrassing what a lot of us were selling goods for,” Millard Drexler, chairman and chief executive officer, said in a conference call. He said he was “disappointed” with the results and blamed the “new, not fun, retail reality.”

J. Crew’s best sellers are “things that are in fact stylish, they’re fashion, they are…under $80 and $90,” according to Drexler.

During the past six months, the company’s stock has dived from $30 a share to under $10. J. Crew slashed prices on fall and holiday items this winter in an effort to reduce its burgeoning inventories.

In January, J. Crew made national headlines when its Web site crashed due to an upsurge of interest from customers seeking the inauguration outfits worn by Michelle Obama and daughters, Sasha and Malia. However, this was not enough to help the company financially. In February, it announced plans to eliminate 10 percent of its workforce.

These difficulties, which most analysts attribute to the economic recession, are a sharp contrast to the company’s situation when it went public in June 2006. J. Crew raised $376 million with its sale of 18.8 million shares priced at $20 each— the third-largest initial public offering in apparel retail history, according to a research note from Morningstar Inc. analysts Brady Lemos.

J. Crew competes closely with Gap Inc.’s Banana Republic brand and is testing two new retail concepts, Crewcuts and Madewell, which target children and younger women respectively. It operates about 300 retail stores across the U.S., including six Crewcuts stores and 12 Madewell stores. One Crewcuts store is in Chicago and two are located in the suburbs.

The company gave guidance for the first quarter of between 7 cents and 12 cents per diluted share, but it did not give guidance for the full year.

The company ended its fiscal year with 300 stores, up from 260 the previous year. In an effort to reach more customers, J. Crew plans to open 25 stores in the coming year and close two.

Drexler said that, in addition to a “continuous evaluation of where the price points are,” the company plans to “be more conservative in what kinds of rents we want to pay.”

“I’m not sure the reality has struck some of our landlords on the values out there,” he said during the conference call. “If prices are down, costs are down. Hello? Rents should be down also.”

Jefferies and Co. Inc. analyst Randal J. Konik has a hold rating on J. Crew.

“[J. Crew is] a stand-out in retail long-term,” said in a research note. “However, weak sales trends and high inventory still dampen our near-term view.”

Morningstar analyst Lemos said in a research note that “the biggest risk to J. Crew’s long-term operations is the ability to predict fashion” because “a missed trend could drive notoriously fickle customers to the competition’s open door.”

For fiscal 2008, net income dropped 44 percent to $54 million, or 85 cents per diluted share, from $97 million, or $1.52 per diluted share, in 2007. Revenue rose 8 percent to $1.4 billion, from $1.3 billion.

Shares of J. Crew closed Wednesday at $10.51 a share, up 79 cents from Tuesday’s close of $9.72.