J.Crew has been offering a lot of promotions lately. (I am not complaining.) However, this article makes me wonder if J.Crew is going to start spacing them out more now.J.Crew Falls After Needham Cuts Estimates on Rising Costs, Discounting
By Matt Townsend
October 20, 2010
J.Crew Group Inc. fell the most since August in New York trading after Needham & Co. cut profit estimates for the clothing retailer, saying increased promotions will lower earnings.
“The fall season has been difficult, due to warmer weather trends, increased promotional environment at the competition and a lack of dramatic fashion newness,” Christine Chen, a Needham analyst in San Francisco, wrote in a note to clients today. Second-half profit margins will be under pressure as the New York-based company increases promotions, she said.
Needham trimmed its profit estimates for the year that ends Jan. 31 to $2.25 a share, from $2.36, and for the following year to $2.48, from $2.54. Earnings estimates for the current and next quarters were reduced as well. Improved fashion and discounting at competitors also put pressure on J.Crew’s prices, said Chen, who recommends holding the company’s shares.
J.Crew dropped $1.76, or 5 percent, to $33.12 at 4:15 p.m. in New York Stock Exchange composite trading. The percentage decline was the largest since Aug. 27. The shares have fallen 26 percent this year.The retailer now has a sale on its website with some items, such as a pink dress, discounted more than 70 percent.
I also hope J.Crew can take the appropriate steps to get back on {fashion} track. Let's hope the Holiday roll-out will be amazing. :)
What is your take on the article? Would you consider purchasing J.Crew stock? Do you think J.Crew will perform better?
Very interesting article! And I think it will be even more interesting to see how JCrew responds . .aka fashion newness!
ReplyDeleteI have to say, I received the 20 percent off cardholder promo, but I'm not biting since there's no free shipping.
ReplyDeleteI can't wait to see the holiday collection. I was kind of meh on the latest catalogue.
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ReplyDeleteI think part of the problem is that I never have any clue whether to pay full-price or wait for a sale at J.Crew now. Part of me feels like J.Crew is pricing for markdowns, instead of setting a fair price for an item from the start. I'm not really a bargain hunter, but I've found that I won't pay full price at J. Crew anymore. I can't imagine that I'm the only one who feels this way.
ReplyDeleteInteresting article! I wonder what their response will be....
ReplyDeleteDenimologista, i agree. I think J.Crew needs to find a better pricing model, i.e. appropriate prices from the beginning and improve on quality. I am not opposed to paying a bit more if i think the article is worth it. Also, if they are going to offer promotions, they should offer promotions that are perceived as equitable that will get people buying. I.e. a discount should be perceived as a discount. Percentages off that only cover shipping charges and taxes are not inspiring customer to buy in my view.
ReplyDeletePerhaps, they are also suffering from decreased sales as they shift their fashion focus -- that is, the more trendy vs. the classic with a twist.
Denimologista - I agree as well! Generally, I have a price set in my mind for what I will pay for something. For instance, generally, the max I will ever pay for a sweater is $70 - and then it better be something I LOVE. Most of the time, my max is closer to $50. When they are pricing at $130-140, there is absolutely no way I would buy.
ReplyDeleteThis is especially true now that I live in Canada. I just paid $59 in duties and taxes on a $155 order! Not going to do that too often. Luckily, I believe I can get refunded for some, if not all of that, at the end of the year since I am still considered a visitor here. If I get residency - forget about it! It will make more sense to wait until I come to visit the States and drop by a store.
I get frustrated as it seems like their prices just keep going up and up and up. The one thing they really need to keep in mind is, at the prices they charge, if an item isn't PERFECT, many people will just send it back. If someone is paying $90+ for a clothing item, they expect it to be really good quality, to be comfortable, and to fit well. That isn't always the outcome with Jcrew.
As for sales, everyone loves to feel like they are getting a good deal, so I don't mind them pricing a little higher for regular price, but when you are having to put things on sale for 50% of even 75% off, something is wrong with your pricing structure. Instead of charging $140 for a sweater, then putting it on sale for $49.99, why not sell it for $75 regular price, then put it on sale for $55? There are many sweaters I would go ahead and purchase at regular price (i.e. the arrow sweater-jacket) if they were in my price range, but instead I ending always waiting for sales as I can't afford regular price! I guess there must be enough people buying for regular price at those prices that it seems worth it to them...?
imbachick, I totally agree. For the retail prices charged, I do expect items to be PERFECT, as you say. I'm an American that moved to Canada because my husband was "transferred" here and the duty/taxes are obscene. As I figure it, usually about 26% tacked on to your order be it J.Crew, Anthropologie or most other online stores. Those that have B&Ms in Canada, like BR, also adjust their prices upward. Apparently there was some disparity due to the low CDN $ in years past but that's been out the window for some time and they are still charging higher prices in the retail stores here. Like you, I do make good on my trips back home and pick up things for much less.
ReplyDeleteFunny how we keep reading these articles touting how great our Dear Leader and Jenna are...
ReplyDeleteIn my opinion, the clothing is ho-hum boring. Remember the days when you didn't have to layer yourself with a thousand things to look good? I can dig out some old catalogs, circa 2007, when the models wore 3 things MAX. Now, they're either dripping with 10 pieces of clothing, or they're undressed (remember the wedding dress that was half on?- yuck). Back to basics, J.Crew. Just because you put out a whole line of items you think are worth mega bucks, I can't help but laugh at how it won't fit my lifestyle.
I must agree with the "lack of dramatic fashion newness" comment. There is little to no "wow" factor in most of the clothes that J.Crew is offering recently. I still, however, do devote part of my monthly paycheck to J.crew, but definitely not as much as before. I will just keep anxiously awaiting fresh new ideas...
ReplyDeleteTee shirts that arrive with small holes, cashmere and wool sweaters that pill and pill and look cheap, shoes that are uncomfortable and boy, did they hit it on the head with the "Lack of fashion newness" statements!
ReplyDeleteI love J Crew, but the pieces I buy and keep are much fewer than in the past, and ITA with all of you about the pricing structures. And yes, aren't we ALL holding out knowing price reductions happen online, many times before they show up in a catalog???
Def. tired of the roses theme, repeats of graphic and embellished tees (NEVER buy until they are reduced 2-3 times!). Jackets and skirts seem to be most consistent and popular.
I have a wonderful online PS who is most accommodating, otherwise, I wouldn't be as apt to buy.
All I can say is way to get called out on Bloomberg.
ReplyDelete:(
ReplyDeleteI hate to say we told you so but most of us saw this coming. Part of the reason J. Crew was doing so well was Michelle Obama raising the brand's public profile (especially among recessionistas, fashionistas that outsourced their high end clothing needs to upscale mall brands during the recession) and J. Crew taking a lot of quality shortcuts despite prices staying the same and even rising on quite a few items. Those aren't sustainable ways to keep profits high. I want to see J. Crew doing well but is it too much to ask that they actually earn my business with quality product at fair prices? If J. Crew wants full price paying customers, all they have to do is make full price worthy items that are fairly priced to begin with. And how about fair promotions and consistent online and retail prices that aren't sneaky and make shopping a hassle. J. Crew is so lucky to have a loyal fan base and I hope they take our feedback seriously before their bottom line suffers more.
Hmm, we hear Mickey hates markdowns, but apparently not enough people want to buy at FP, me included, for all the reasons already mentioned. Doesn't sound sustainable...
ReplyDeleteTotally agree with what has been said ...
ReplyDeleteI personally want most of my purchases to be investment pieces - I limit items that are trendy or don't have good-quality material.
I hate seeing the current crop of sweaters with high price tags and acrylic listed as the first material! Yuck! I just refuse to buy those pieces.
I'm willing to pay for quality, but I still want interesting and stylish design. Enough with the see-through t-shirts, pilling cashmere, holes, and so on ...
And aren't the people paying full price only to see the items put on sale a couple of weeks after rollout pissed off? I rarely buy anything full price, b/c J.Crew has conditioned me to wait for it to go on sale, but if I did I would not be a happy camper.
The whole J.Crew strategy feels increasingly manipulative and like it disrespects the customer. Poor quality, inconsistent pricing and rewards, more discounts but high shipping, etc.
Great topic!
ReplyDeleteITA on the current strategy. Back in late 2007/early 2008, there were free ship/no min codes available weekly. I could place an order for the 1-2 things I wanted at the time and be done with it. No ride alongs and subsequent trips to the store. Also, the prices were less volatile - I never had to worry about price adjustments or anything of the sort. The quality was great as well... I only wish I could've afforded to purchase more back then.
Now I can't help but look at FP merchandise and think about how much it will be marked down in two weeks, or how low the prices will eventually go. Like, "Well, it's a silk cami so it could potentially end up at $19.99..." The neverending final sale doesn't help things, nor does the wrong items being shipped. It seems like the way to get back to the popularity of their heyday (and I'm not talking about bringing back critters) is obvious to JCA's (how many times have quality and flat rate shipping been mentioned here,really!), but the only thing JC seems to be taking from the blogs is how to make the shopping experience more angst-ridden for their customers. It would behoove them to actually listen to their loyal customers... but maybe that would mean they'd have to not grow at an unrealistic pace for a time while they get their act together.
interesting....
ReplyDeletethe stuff in the store right now isnt that exciting at full price/or sale. that is why sales are down.
they were successful 2 years ago with the ruffles etc but need a new look. I loved the prints from before that.
and I agree all of these markdowns being different in the B/M vs. online, final sale is too much for even the most dedicated shopper tol deal with.
Everything already mentioned has hit the nail on the head!
ReplyDeleteI can not remember how many times I go to order things and then see the shipping and re-think my order!
Or when I buy sale or full price and try to return or exchange in store, I get a hassle from the staff; its discouraging and makes me buy less and less. This fall, I have purchased about 5 pieces; last fall it was probably around 20.
I hope the holiday line wows me; or else I might have to start seriously shopping elsewhere.
I am sure I am not the only customer who used to get a $100-$125 rewards card every period and now I might get a $25 one. This time I am getting noting as I did a few periods ago. So, if I am shopping less from JCrew I am sure many other are too--all for various reasons. I really used to like their items and the quality was there.
ReplyDeleteI am not as upset with the online/store pricing decrepancy and don't do the returns b/c it goes on sale for less etc. as I do most of my shopping online and don't have the time or energy to play the game. I just decide what I am willing to pay for an item and have to be happy with that--otherwise I would go crazy!
Yes, sales are down for JCrew.Not surprised with all the sales.
I've never understood why J. Crew took its tried and true classics with a twist theme that brought it so much success and threw it over for trendy. In this economy? Not smart!
ReplyDeleteBy the way, Talbots is copying J. Crew's rosettes, but they're doing it with some really pretty pieces!
Also, to J. Crew - bring back pretty jewelry!
"The retailer now has a sale on its website with some items, such as a pink dress, discounted more than 70 percent."
ReplyDeleteWhen I read this...
I immediately thought of Super 120s Andre suiting dress in Sweet tulip color. Originally $188, down to $50 I bought it last week with 30% off, it was $35. Almost 80% off. I felt so sorry for J Crew. I guess somebody else noticed...
Why would a professional woman wear shorter length, low cut pink suiting dress to work? I bought it to wear as a casual dress because I love the fabric.
I hope J Crew wakes up to the reality.
I heard that material and labor cost in China is rising so almost everything will be priced more next year (from someone in retail headquarter, just came back from factories in China)
I wonder how JC will price theirs next year in accordance with the infamous quality.
No surprise there with "lack of dramatic fashion newness." I want JC to do well but I've seen this coming.
ReplyDeleteITA with all the statements here. If only Dear Leader would take the JCA sentiments more seriously.
I also look at some clothing as investments (well, my husband would disagree) and I will not spend my $$ for clothing that falls apart in couple wearings. I've been a JC shopper not for trendy but classic, timeless clothing with quality.
himmiefan,
ReplyDeleteI remember an article about Mickey and Jenna long time ago...before Jenna was promoted...when the two first met. It also mentioned Jenna wearing cargo-kind of pants with heels.
Mickey asked Jenna what's her thought about an item, and she said "it does 1-2 million (dollars) but I hate it" then Mickey said to drop the item. I guess that's how it started...?
J.Crew needs to lower their prices - I used to be able to afford some of their stuff, but these days all I can afford is when they run their promotions - AND when it's final sale, it's too big of a gamble to take to purchase. Especially when Old Navy, Target, and H&M are putting out cute clothes at affordable prices. And like others have said, the quality of the stuff I've recently purchased from J.Crew is the same as the quality from those other more affordable retailers.
ReplyDeleteIf they would just improve their quality instead of offering the overpriced cheap crap they have now (w/ the exception of a few things), they'd be back on track. I would looove to get a few new cashmere sweaters, I used to get several fall, but I just won't anymore knowing its going to look like crap in no time at all. I'd rather buy elsewhere where the quality is better or the price is cheaper. It's unfortunate, JC used to be my go-to store! Now, I still stop in frequently, but I RARELY buy anything, and I'm usually out in 5 minutes b/c there is absolutely nothing new/cute/inspiring. About the only I like right now are the cords and perfect fit tees. I digress...
ReplyDeleteI mostly stick to the classic basics at J.Crew and I'm thankful they still have the pencil skirts, Jackie twinsets and fabulous coats. Of course that is a small segment of their total line, most of which I find far less appealing. The quality has definitely declined on the pencil skirts and Jackie sweaters since 2008. And now we are seeing posts about bags falling apart, which used to be a quality item that J.Crew did well. Oops.
ReplyDelete78 percent OFF a PINK DRESS???
ReplyDeleteMust be the Cotton cady Sydney dress— was $225.00 select colors now $49.99
Who pays $225 for a cotton dress anyway? $50 sounds like the real price and they're still getting a nice mark up at that. Pfft
I wish JC would produce multiple lines/labels to cover their broad range of customers. For example, they could offer a "classics" line for the old tried-and-true items, a "modern" line for the newer, trendier items, etc. They already have Collection for their more unique or high-end pieces...I don't know why they can't seem to figure out how to appeal to multiple demographics without alienating core customers. I mean, Forever21 already does this...
ReplyDeleteMimi.magnolia, excellent idea. I got the November catalog yesterday (with no coupon) and was not in love with one thing. Bo-ring. And I am hesitant to buy anything with "wool" from them, as their wool items tend to be ITCHY. Regarding pricing, I am sure that some of what is happening is a reflection of a sick economy and a worn out debt generation (who is their target market). How can I pay $250 dollars for a blazer when my student loans are huge, my mortgage equity is upside down, I have no health insurance because it's now a "perk", and my doctoral education did not pay off like the boomers claimed it would? This is not your mother's economy, children. And I will probably never see a lifestyle like that of the boomers, where you work hard but it pays off in salary, retirement, and benefits. Sorry, unexpected rant.
ReplyDeleteI was so excited to go to the store after not having been in several months. I can see whay JCrew took another hit. I really miss the good old days of JCrew when I would go in and come out with shopping bags full!
ReplyDeleteCharlotte sometimes, amen!
ReplyDeleteAnd how about JCrew offering fewer things?? Just basics and then 3 or 4 high-quality designs for dresses, skirts, jackets, etc., and then avoid markdowns. ITA that the "how cheap will this become" question haunts every purchase, and prevents many.
This approach would also work better for the economy, when what we need is a FEW, NICE pieces that will LAST.