Great news for our favorite retailer! I have to say, I am surprised menswear increased at a higher rate than women. (Although I bet, the actual figure still shows women outspending men at J.Crew.) ;)J.Crew Profit Vaults Ahead
By David Moin
August 29, 2012
J.Crew Group Inc. is running strong and bringing its business to new markets.
“It’s been a nice year so far,” Millard “Mickey” Drexler, chairman and chief executive officer, told WWD. “Every day we get a bit smarter about our business, but you can never let your guard down.”
On Wednesday, the company reported a robust second quarter, marked by a return to the black and strong sales and full-price selling across several categories. Executives also cited plans to add more men’s wear stores this year, and divulged the time frame for opening the first J.Crew stores in Europe and Asia, meaning the company is getting close to signing leases. A London store is seen opening in the second half of 2013, and a store in Hong Kong is seen opening in the first half of 2014.
...J.Crew reported net income of $22 million for the second quarter ended July 28, compared with a $10.5 million loss in the year-ago period. Last year’s loss was due to nonrecurring inventory and litigation costs associated with its acquisition by TPG Capital L.P. and Leonard Green & Partners L.P. in March 2011. In the 2011 period, the amortization of inventory from purchase accounting cost the company $22 million, and litigation costs reached $6.5 million.
Total revenues in the latest quarter rose 21 percent to $525.5 million, while comparable company sales increased 14 percent. Gross margin increased to 45.1 percent from 36.5 percent, reflecting healthy full-price selling.
Operating income increased to $62.1 million, compared with $12.3 million in the second quarter of 2011.
Men’s wear, according to the company, increased at a higher rate than women’s last quarter, and executives cited plans to open two more units this year, including a Ludlow shop in Copley Place in Boston on Sept. 18, and a J.Crew men’s shop in The Grove in Los Angeles on Nov. 21, bringing the total to nine men’s units. J.Crew men’s wear, Drexler said, has become “quite well known as a strong franchise. Our Ludlow suit business is a business unto itself, as is our shirt business.” Ludlow is a J.Crew label.
With the rollout of men’s stores, “We are ramping up, only selectively,” Drexler said. “We are not running fast. We are running strategically and appropriately….I don’t think men have had a great choice in the last number of years to buy high quality at prices that are reasonable.”
Overall at the company, “We intensified our product offerings from a creative point of view,” Drexler said. “I would characterize the J.Crew product and merchandising as standing out in the marketplace. People voted with their pocketbooks, but we worked hard at it, and we continue to innovate and create every day….A lot of designers sell primarily accessories. We are in the apparel and accessory business.”
Drexler said that the brand’s pricing below designer and the fact that J.Crew is not sold at discount in channels other than its own “long-term builds loyalty into the customer base.” He also said not being a business that designs products flaunting the logo enhances the appeal. “We maintain the friendliness of the brand.”
Drexler also said that certain categories were identified for intensification this year, though he declined to specify, and also stressed the marketing efforts, including reformulating the catalogue, were intensified as well.
Regarding the Madewell brand, Drexler said, “We are expanding it both storewise and onlinewise. We’re very excited. We’re launching our fourth catalogue in September.”
I also have to agree with Mickey about not flaunting the label. When I was younger I did not mind having the label of the clothing company visible. However, not so much anymore.
Lastly, I am not sure why Madewell does not keep up with a catalog. Seems like they could at least be rolling one out every season. Just a thought...
What are your thoughts on this latest news? Any points you found interesting?
Thanks for sharing Alexis!
ReplyDeleteInteresting article....this leads me to believe that cost-cutting measures on the quality side are boosting their profit margins, even with deep discounts. I worry we won't see a return of the No. 2 pencil skirts of yesteryear :(
Menswear performing well - based on my experience shopping for my BF, the menswear seems more consistent, quality-wise, than the womenswear. I think they are still sticking with more classic looks, and the sale sections at my stores are usually pretty lean.
Always glad to see J.Crew doing well, although I agree with StylishlySpoken that quality on the women's side remains an issue for me. My purchases are way down this year because the last few J.Crew items I've purchased have not held up well. It's hard to resist their shapes and colors, because they do it so damn well, but I need clothes that last.
ReplyDeleteThe men's stuff has been great. I've been getting tons of stuff over on that side for my guy.
J Crew has to speak to their stock holders - and this quarter they gave them the kind of news they want to hear - great for the stock and stockholders. Not so great for the consumer. Mickey said it best in his quote in the article "people voted with their pocketbooks." The only way to get the message across is to "vote with your pocketbook" and not buy the lower quality items.
ReplyDeletefyi: J.Crew is no longer a publicly held company.
Deleteamazing how profitable they are when so much stuff goes right to markdown or final sale. I will spare you all the cynical lecture on economics, this speaks for itself. Have a lovely lazy weekend, everyone!
ReplyDeleteI like that the point that J Crew is only available via their own channels is on their radar. For me, that's important. I know we saw J Crew at TJ Maxx for a short period a few years back and it was fun to get shoes for a big bargain but overall I'm glad they don't sell to 3rd party retailers.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteFlower Power - Try to get another rep. If you have more questions, email me. gigiofca at gmail
DeleteNice job, J.Crew! You drive me nuts, but I'm sure I would lock myself in my room for days to grieve if you went bust, just like Mona von Bismarck did when Balenciaga closed his doors in 1968. I'm also glad that J.Crew doesn't have a recognizable logo that they stamp on all of their crap. Whenever I see someone decked out in logo gear now, I want to ask them if they just woke up from a pre-recession coma.
ReplyDeleteThe BF has some tees from J.Crew that he washes/wears a lot and there are no holes, so maybe I'll buy myself a tee in the men's section the next time I'm in a B&M. I'm done with the women's tees - as soon as I get attached to them they suddenly develop four holes and I have to toss them.
From the menswear I've seen, it is more likely to be 100pct cotton or wool, no yucky synthetics or blends. The t-shirts are thicker weight and tighter weave. I wish they would use the same fabrics on some basic tees for women. I am having the worst time tracking down quality basic tees that don't cost a fortune...
ReplyDeleteI wish J Crew would be a little more generous with their discounts to loyal shoppers. I literally never get any of these promotions or any of the presents. Nothing in my catalog. Nothing in my mailbox. Nothing in my email. My old VPS used to honor most of the promtions floating around but she moved on and my new one doesn't even respond to my emails. I can't even get product info let alone a percent off.
ReplyDeleteI tend to be a full price or first markdown shopper. I buy a few carefully selected pieces, and rarely purchase anything on deep discount as my sizes and first choice colors often sell out and and I am very picky.
I have a shopping cart loaded with a few expensive items I simply refuse to buy at full price after J Crew marked down my last full price purchase to half price within weeks of its debut.
It is especially annoying knowing that the promotion has been extended to other cardholder's who didn't get it. I feel like one of the unpopular kids and it sucks.
I'm picky too, I don't buy a lot, and always buy at full price, most of the time, if something hits sale, I didn't want it enough in the first place.
DeleteI don't think it should matter what kind of items you buy or when in the markdown cycle you purchase them. The bottom line should be quarterly or annual spend, which I think is a very fair way to tier a loyalty program.
DeleteThat they don't do it (except for cardholders, apparently) is my number 1 pet peeve about the company, even above cross-channel proce discrepancies and crappy final sale policies!
Kitsmommy, I can give you a code for 20% an order of $150 or more if u email me tomorrow at dagmaral(at)gmail.com I can't give it to u now because I left it at work in my desk drawer
DeleteAlexis, the comment about not flaunting the label also resonated with me. I don't like labels splashed all over me, it always seems a bit desperate for attention IMO.
ReplyDeleteI also agree with Mickey on the Ludlow suit. My husband wears some high-end suits, Brioni, Zegna, etc. but he also has a J.Crew Ludlow linen suit that he has worn frequently during the summer months and on our tropical vacations. It's very flattering and I really like the fit.
Unfortunately the quality is declining in the menswear too. On my last visit stateside I bought my husband a cotton sweater and some tees. The sweater developed a hole on the first wearing and one of the tees was worn twice before developing a hole that became a huge run down the back of the shirt.
xoxo: I bought my hubs one too, I love it.
Deleteum, rising prices...they're asking $1,250 for the collection bow sequin top. I got a similar JC collection sequin jacket (fully covered in sequins, as is the top) that was around $400 full prices, for about $130 on sale. I guess my ebay auction price of $79 is a real bargain right now.
ReplyDeleteOT, but if anyone bought the collection cashmere cable sweater last year, could you please let me know how it wore? Is this one of those cashmere items that is going to pill easily?
ReplyDeletekitsmommy, mine wore really well. It did get pills under the arms... but only a few larger ones, not the allover terrible pilling you often see. It is a looser weave so I was not surprised to see the underarm pilling.
DeleteBtw, the sweater comb JC sells works wonders. Totally worth getting. Gets the pills off without snags.
DeleteOT: Just noticed an email saying there are new arrivals on the website. There are a few items I hadn't noticed before or maybe I just haven't been very observant. Anyone else notice this?
ReplyDeleteYes..new items were added. Also a new Collection lookbook..with some amazing styling!
DeleteIt is depressing that their fall items has a lot of 'Collection' pieces more than last fall, is it just me that notices that?
No wonder profits are high...
The new collection lookbook reminds me a lot of Shopbop lookbooks.
DeleteJSR, I was also noticing a much larger percentage of collection items versus "regular" items... I guess they are trying really hard to become a higher-end store.
DeleteIn the Fall 5 essentials, does anyone know what the sweater is paired with the No. 2 pencil skirt in the second look? It's not listed on the "Shop this look" page.
DeleteRoxy - chatted with 2 reps. No one could tell me anything about that sweater. One said, "It hasn't debuted yet."
DeleteThanks Gigi. You're wonderful to ask for me. :)
DeleteIt's great to see J. Crew doing well profit-wise, given the recent discounting cycles off full price ... items are literally going to sale and sometimes final sale in three weeks. I hope it means we will continue to see this promotional strategy, because full price on many new arrivals is absurd, and let's be honest, a promo offer or second markdown is often what the item is objectively worth vs. comparable goods.
ReplyDeleteLand's End (of all places) has a beautiful-quality calf hair pump that is 100% leather inside and out, suede heel counter, leather outsole, with a stacked-wood, leather-wrapped heel. It's a steal at $120. The Collection Etta in calf hair is gorgeous too, but at $350 will need a markdown or two for me to consider it. If JC can be profitable at markdown prices, I'm all in.
New in-store markdowns seen today:
Deletesnakeskin pencil skirt 99.99
multicolor tweed pencil skirt 89.99
floral brocade pencil skirt 79.99
also, warm jade wool cafe capris 79.99 (i think)
DeleteNice to see, but net $22M on $525M sales is no huge feat. I don't know what the retail industry does, so maybe it is a big deal. I don't know. Let's see them next year about the same time.
ReplyDeleteI also like the 'no label' look on JC clothes.
The uptick in sales must be a direct result of my JC purchases from their summer sales;-) They're missing out, I still need a pair of Olympia heels in seashore beige (size 8.5) to go with the Gondola skirt I couldn't resist.
ReplyDeleteOT: Emerson Fry just put a lot of their Spring Stock on sale and posted some preview pics of Fall 2012 (on Tumblr, which I can't access at work, dang it). Some very cute things, now at half price! They don't issue refunds on sale items, but you can return for store credit.
ReplyDeleteFYI: Check their size charts against your personal body measurements - they are pretty accurate based on the items that I've ordered in the past. Also, their "Pins" jeans are made for people who are built exactly like EF.
Wish the Paulo loafers weren't sold out. Oh well. I can't afford to buy anything from EF anyway since the duty and lack of flat rate shipping to Canada makes it ridiculously expensive.
DeleteFlower Power (I can't get "reply" to work)
ReplyDeleteThat response about "random" cardholders is a consumer protection scandal as far as I am concerned.
J.Crew's website promises "Cardmember-only invitations to private events." (It used to promise "Cardmember-only invitations to private sales.") Note that this promise is to all cardholders--it is not limited to cardholders who live near a B&M, cardholders who use a VPS, cardholders who spend a lot, much less "random" cardholders. So, J.Crew, where are these promised invitations?
As I mentioned before, I shouldn't complain, because I did receive a code, but it was at a very old e-mail adress--neither associated with my JC account nor with my JC card. Hmm. P.S. my confirmation code is "esorry," LOL.
I received an invitation in the mail Monday to a "Champagne and Shopping" event in honor of Fashion's Night Out on Sept 6 at the Collection Store. I have not, however, received a code or any promos in my 3 recent online orders. Not sure if I received this invitation because I live in Manhattan? It's not the first invite I've received, but as a cardholder I never get codes. Any other NYC JCA's receive it?
DeleteCarly, I haven't gotten anything, but I'm not a cardholder.
DeleteI received the cardholder promo offer, but I was also invited to the Madewell Fashion's Night Out festivities…which would be grand, but there isn't a Madewell in my state!
DeleteIf prices continue to escalate with declining or questionable quality, I would be hesitant to take a close look at numbers next quarter!
And, to say something postive here, as others have said it is the no-label aspect that keeps bringing me back.
ReplyDeletewhat an interesting read - thank you for this post, Alexis. xox P
ReplyDeletephiphisblog.com
About the no label look. They may not have visible labels all over their clothing but their look is pretty ingrained into fashionista's heads. I'm often asked if I'm wearing JCrew and sometimes I'm not. But apparently my styling and choice of non JCrew items look like I'm am wearing JCrew. I hate to say it, but JC has had a pretty strong influence on style. I mix alot of Land's End, Ralph Lauren, and other classics with my JC items. The 5 Fall Essentials look can easily be duplicated with non-JC items. I like looking for styling ideas, but I don't want to be a head to toe walking JC model. I'm glad they are doing well as a company. I'd be bummed if they closed their doors. I'd be richer, but not as cutely dressed. Hee!
ReplyDeleteI agree that J. Crew is very distinctive, in spite of not having visible labels. I probably need a J. Crew intervention, but I can always recognize J. Crew clothes on people, even when they are just basic pieces.
Deletestraycat, last week I stopped at a farmstand for corn & tomatoes, and the nice old lady who waited on me said "Oh, you're wearing J.Crew! Their catalogs aren't as nice as they used to be, are they?" The funny part is, that stand is only about 5 minutes from where the Montgomery Ward "catalog store" used to be.
ReplyDeleteTried to reply to my own post but it did not work.
ReplyDeleteUpdate - right after I got off of live chat, the SC rep Sharon M emailed my personal address and told me they would put a notation in my account. So, problem solved. Hopefully next time they will reward all cardholders.
I do agree that one of the things I like about J Crew is lack of labels.
But one thing I really miss is the interior detials - gorgeous linings, piping, trims, etc. I remember buying a jacket once just because the lining was so pretty when you rolled up your sleeves. No one saw it but me (and my hangers) but it was one of those things that elevated the Crew over GAP, BR< etc. Those days seem gone though.
I have to say, I'm over J.Crew. We've had a fun, expensive, year-long romance after the first Canadian store opened nearby last August. I've had a nice time, JC, and have some nice mementos of our fling, but I am done with your wonky sizing, dodgy fabrics and random (over)pricing. Not to mention that all your 'original' items/prints seem to show up at every retailer in myriad versions. I'm sure that great profit margin was partly my doing, but I feel like I've finally left Vegas.
ReplyDeleteIt's not you, JC, it's me. Or maybe it IS you. I'm sure we can still be friends. But not BFFs.
Cate and Wellfedfred.....I don't see alot of people around here in all J.Crew. I don't live in the most fashionalbe city. Although one day I walked right by a women in the mall and we were both wearing the anchors aweigh blouse. Of course I had it styled much better. Snort!
ReplyDeleteI am not sure what the purpose of the Look Book is, they show items that are not available for purchase. Then offer to take your order in advance, charge your card and ship the item when it arrives. When you ask about fabric content, garment measurements, and color options the CS rep has no answers and does not know when they'll have the answer or when the item will ship. Why should I prepay for an item, that I have no clue what the fabric is or how it will fit me?
ReplyDelete