Tuesday, March 4, 2014

J.Crew In the News: Will They Be Bought? Go Public? Who Knows?

"Thanks!" to so many of you, for letting us know about the following news about our favorite retailer.

The following is from the Wall Street Journal (click here to read in its entirety):
J.Crew in Talks to be Sold to Japan's Fast Retailing U.S. Retailer Is Seeking as Much as $5 Billion in a Sale
Mike Spector And Dana Mattioli
February 28, 2014

The owners of J.Crew Group Inc. are in talks to sell the clothing retailer to Japan's Fast Retailing Co. for as much as $5 billion, a deal that would help the Asian company fulfill its ambition of becoming a global retailing powerhouse.

Fast Retailing, which owns the Uniqlo apparel chain, approached J.Crew's management about potentially buying the private-equity-owned business, said people familiar with the matter. J.Crew is seeking upward of $5 billion for the business, one of the people said. It remained unclear whether Fast Retailing would pay that much and whether the two sides have yet discussed a price.

The talks, which heated up this week, are at an early stage and could fall apart, this person cautioned. J.Crew also recently received takeover overtures from a couple other suitors, this person said. Their identities couldn't be learned.

The discussions come as J.Crew's owners, private-equity firms TPG and Leonard Green & Partners LP, are considering an initial public offering for the apparel chain later this year. In January, the company asked Goldman Sachs Group Inc. to begin work on a potential IPO, the people said. IPO planning hasn't progressed beyond that, one person said. ...

Mr. Yanai, 65 and one of Japan's richest men, has long been an admirer of J.Crew Chairman and CEO Millard S. "Mickey" Drexler, said people familiar with the matter. From 1995 until 2002, Mr. Drexler, 69, was CEO of Gap Inc. as sales rose to $14.5 billion from $4.4 billion.

Fast Retailing, which employs more than 23,000 people and has a market capitalization of about $36 billion, owns other brands besides Uniqlo, including Comptoirs des Cotonniers, Helmut Lang, Theory and Princesse Tam Tam. Uniqlo sells T-shirts, sweaters, and cold-weather gear to men, women and children, with prices as low as $9.99 for a pair of jeans. ...

Mr. Yanai studied Gap's retail aesthetic under Mr. Drexler, and used it as a model for Uniqlo's lineup of T-shirts, sweaters and khakis, the people said. Mr. Yanai was so consumed with Gap's look during the 1980s and '90s that he referred to Mr. Drexler as "professor" when the two eventually met in Tokyo, said a person with knowledge of the meeting. Mr. Yanai for some time had a photo of them together in his office, this person said.

In the past, Mr. Yanai and investment bankers discussed Fast Retailing buying Gap, which currently has a market value of nearly $20 billion, according to people familiar with the matter.

Mr. Drexler is known to have an eye for spotting trends early and an obsessive attention to detail. In 2011, J.Crew opened its first store in Canada. More recently, the company opened stores in London, aiming to take its classic American looks abroad. In addition to its namesake stores, J.Crew also has a brand called Madewell, outlet stores and a children's line.

Former Fast Retailing executives have said Mr. Yanai, who along with family members own more than a third of the company's shares, wrestles with two sometimes opposing wishes: his eagerness to make a splashy deal in the U.S. and his refusal to pay a penny more than what he perceives to be fair value.

As a result, former executives have said, the company has studied potential U.S. acquisitions, only to see Mr. Yanai scrap the deal at the last minute over small differences over price. Still, Fast Retailing has been snapping up American brands. In 2012 for example, it acquired an 80.1% stake in premium denim company J. Brand for $290 million.

But the company's U.S. expansion has been bumpy. In 2006, Uniqlo rolled out mall stores throughout the U.S. only to close them within a year because of poor results.
Well, they did not plan to stay private for too long, now did they!?! ;) Interesting to see what ends up transpiring. At this point, nothing is certain.

I personally think J.Crew will go public again, instead of being bought outright. In any case, I hope J.Crew can maintain "the things they do best" like their amazing customer service.

What are your thoughts? Do you think J.Crew will be bought out or go public? What do you hope they do?


  1. I bet there will be an IPO. I don't think they'd get sold. I think an IPO would get them even more equity than Uniqlo's parent company could ever provide.

  2. Frankly what I hope they do? Hire a women's designer, hire a detail-oriented web site designer who does not have a background in gaming, and institute a uniform inventory control system with real-time stock checks. Since new management usually trims and then reforms, I don't think it matters much who wins the bidding war that the VCs are trying to ignite.

    1. Agreed on all points. Does nobody at 770 believe in data-driven decision making? Take a look at the number of "Collection" sequin skirts sold and the number still sitting in FS before committing to producing yet another round of them. JC is notorious for doing what doesn't work for far too long - how long were JCA's suffering from "ruffle fatigue" before it finally stopped? Now it's the too-short, too-boxy tops.
      Also, bring in somebody with an eye to edit the line - how many bejeweled shirts can a person possibly own?

      ruffles, wherever you are - I hope you'll come and join us in this topic!

    2. Silver Lining - you always make sense. ITA -adding café capri's to the list as well.

  3. I wish Inditex would buy J Crew. They own Zara. Zara is impressive, cutting edge inexpensive fashions, fantastic web site with what appears to be real-time inventory, super fast shipping and easy returns. (Zara Home is even better.)

  4. Wow-see, I think if they were bought, the quality would plummet. And you'd all be griping even more.


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