In the third biggest apparel retail IPO ever, J. Crew Group Inc.'s (JCG) shares rose 25 percent for their trading debut after pricing higher than expected.

J. Crew's performance is a bright spot in the initial public offering market, which has faltered since mid-May. But the New York-based preppy retailer, which has transformed itself from a struggling apparel chain to a fashion powerhouse, now faces pressure from shareholders to keep churning out fashion hits.

Click here to visit FOXBusiness.com's Investing Center.

"They will be under more scrutiny, and their audience has expanded many fold," said Richard Peterson, a research analyst at Thomson Financial.

J. Crew shares, which trade on the New York Stock Exchange under the symbol "JCG," opened at $25.01 per share, only retreating slightly to $24.93 in late afternoon trading. The opening price was up $5.01 from the offering price of $20 set late Tuesday.

In an earlier regulatory filing, J. Crew said it had expected to sell the 18.8 million shares at an estimated range of $15 to $17 each. With the $20 price, the company will receive gross proceeds of $376 million and will use the money to redeem its preferred stock.

J. Crew's IPO is ranked behind Intimate Brands, which spun off from what was then called Limited Inc. in 1995 in a deal that raised $722 million and Saks Holdings Inc. in 1996, which raised $387 million, according to Peterson. Limited brought back Intimate Brands in 2002, the same year it changed the company name to Limited Brands.

The timing of the public offering of J. Crew wasn't the best, given worries about a consumer spending slowdown. But clearly investors were focusing on one tangible amid the uncertainty: Millard Drexler, the company's CEO, known as the fashion industry's merchant guru.

Since joining J. Crew in 2003, Drexler, the former CEO and famed marketer behind Gap Inc., has revitalized the fashion chain, which has long struggled with an identity crisis amid a string of executive defections. Under Drexler's stewardship, J. Crew has returned to its preppy roots. The clothing ranges from $20 cotton T-shirts to $550 tuxedo jackets for men.

Among some of the summer fashions are cargo jackets, cropped stretch chino pants and body-hugging beaded tunics.

For the fiscal 2005 period, J. Crew posted net income of $3.8 million compared with a loss of $100.3 million in the year-ago period. Revenue rose 18.5 percent to $953.2 million.

In its first quarter, ended April 29, J. Crew reported a 60 percent profit increase as sales showed double-digit gains. Business at stores open at least a year, known as same-store sales, rose 12 percent in the first quarter, compared to a 37 percent increase a year earlier. Same-store sales are considered a key measure of a retailer's health.

J. Crew — which sells its clothes through its 164 retail stores, 45 factory stores, catalogs and its Web site_ plans to grow at a cautious pace. It is set to add between 15 and 30 stores this year, and thereafter open between 25 and 35 annually, according to a recent Securities and Exchange Commission filing.

In May, J.Crew also announced it was developing a new chain of casual women's clothing stores called Madewell, which will focus on key fashion basics like chinos. That follows the launch of a wedding collection in 2004 and the unveiling of "crewcuts," a children's collection this year.

Still, J.Crew's future success will depend on Drexler's star power. His presence is what catapulted the retailer to where it is now, Peterson said.

"His imprint is tangible and very key for the future success of the operation," he said.

After the IPO, Texas Pacific Group, a private investment group that purchased a majority stake in J. Crew in 1997, will still own about 40 percent of its common stock, a recent filing said.

Goldman, Sachs & Co. and Bear, Stearns & Co. Inc. were the lead underwriters for the J.Crew's IPO.