The ongoing J.Crew-needs-a-major-turnaround-and-fast saga continues. On Monday afternoon, the retailer launched its earnings outcomes for the primary quarter of fiscal 2017, and issues have not improved a lot since last year. In truth, they’ve gotten worse.
For the corporate as a complete, income decreased 6 p.c to $532.zero million, with comparable gross sales down 9 p.c. Those numbers would have been even worse with out the inclusion of sister model Madewell, the place gross sales elevated 17 p.c as a complete and 10 p.c on a comparable foundation. At J.Crew, gross sales decreased 11 p.c, with comparable gross sales down 12 p.c. This marks an 11th consecutive quarterly decline, in accordance with Bloomberg.
“While we’re disillusioned with our first quarter earnings, we’re optimistic relating to the work now we have underway to enhance our enterprise,” stated Chairman and departing CEO Mickey Drexler in an announcement. “We have a transparent imaginative and prescient and motion plan in place to fulfill our prospects’ wants — wherever and nonetheless they select to buy. I look ahead to transitioning my position to chairman and to working with our new CEO, Jim Brett, as he takes the reins in July and continues to place J.Crew for long run success.”
Part of that plan, as has already been announced, was eliminating 250 positions (primarily at J.Crew headquarters), and reorganizing the corporate’s govt administration construction. Announced Monday, there may also be retailer closures this 12 months. While the corporate plans to open as many as 10 new Madewell shops in 2017, it additionally plans to shutter a complete of 20 shops. While it was not specified how these closures will break down by model, it feels protected to imagine that almost all will not be Madewell. The retailer can be providing a debt swap to lenders to purchase extra time for its turnaround, which Bloomberg explains in more depth.
During a convention name for traders and analysts on Monday, executives from the corporate expanded on its strategy to turn things around. The firm’s President, COO and CFO Mike Nicholson stated they’ve spent the previous few months doing “in-depth evaluation” of “each side of the enterprise” and assessing buyer suggestions to determine the issues the corporate wants to deal with and the way. One space of focus shall be merchandising and design: Chief Merchandising Officer Lisa Greenwald, alongside Head Designer Somsack Sikhounmuong, will deal with higher aligning design and merchandising, bringing high quality and “stronger worth” to traditional appears and including new classes and kinds. Another space is pricing; Nicholson says the corporate is targeted on “evolving pricing structure to align with buyer expectations and bettering worth notion.” Then, there’s advertising: J.Crew plans to “reinvent” its well-known catalog, or “model information,” scaling again on deliveries and reinvesting these sources on extra digitally-focused advertising initiatives that it hopes may have a stronger impression by way of driving precise gross sales.
In addition, Nicholson stated the corporate can be exploring “alternatives for extra factors of distribution” to succeed in extra prospects, via each “home wholesale” partnerships and franchise partnerships to beef up worldwide presence — mentioning the Middle East, particularly. Just final 12 months, J.Crew entered its first U.S. brick-and-mortar wholesale partnership with Nordstrom. It additionally sells via Net-a-Porter and Bon Marché.
That’s all on prime of beforehand outlined plans to execute omnichannel functionality enhancements, operational effectivity enhancements and varied cost-cutting measures.
Brett actually has his work reduce out for him.