J.Crew's Women's Collection Is Costing Millions

*eh, nice outfit?

"Thanks!" to Shopalot (in this post) who gave us a heads up about J.Crew's most recent earnings report. The following from Racked (click here to read in its entirety) sums up their current situation:

J.Crew's Suffering Women's Business Is Costing It Millions
by Erika Adams
December 5, 2014

After posting a dismal earnings report yesterday, J.Crew CEO Mickey Drexler sat down with WWD to explain how the company went from a net income of $35.4 million to a reported loss of $607.8 million in the span of one year.

In particular, women's apparel and accessories sales have been hit hard. Drexler reasons that a widespread downturn in apparel sales across the industry was partially to blame, but he's not above accepting that the company's womenswear is doing terrible right now. "We've had a very tough year and I, along with the team, own this," Drexler says. "We saw a significant slowdown in our women's business. We own that even more. In that regard, we need to improve."

In the future, those improvements may include dipping into apparel categories that Drexler previously said the company wouldn't touch, like athleisure. In regard to that specifically, Drexler says: "We are constantly evaluating percentages and the investments we make by category." In other words, it's no longer off limits.

While J.Crew's women's business is suffering, Madewell posted a 32% revenue gain, J.Crew's men's business hasn't declined, and Drexler is confident in the inventory currently in stores as opposed to six months ago. While Drexler maintains that J.Crew is in a difficult position for now, he says that the women's sector has survived low sales in the past and will continue to do so. "I don't like it," Drexler says. "It's never any fun. When it seems worse, it usually gets better. That being said, we all have a job to do. We are going to fight the fight and do a better job." 

"Thanks!" to several JCAs (in this post), who came up some very insightful feedback on J.Crew's current situation. The ones that really resonated with me included the following:

JSR (in this post) mentions:

My list of what needs to be done at corporate:

1. CHANGE your women's head designer.
2. Bring colors back.
3. No drop shoulders.
4. The oversized coats..too many that are ill fitting.
5. Bring back prints.
6. Stop making poly shirts.
7. Make pretty dresses with interesting cuts and designs. Not the straight sack kind. ...

Blakemdjohns (in this post) mentions:

My thoughts are: (1) there's way too much inventory. Instead of doing 6 similar droopy, oversized sweaters, do *one* really nice fitting sweater and do it well; (2) Quality. People will pay for quality. No more synthetics, no more seams that fall apart. No more buttons that are cheap and crack and/or fall off; (3) Stop trying to do all. the. trends. Leave the trendy stuff to the fast fashion retailers. Zippers, and bedazzled everything is just silly. Going back to number one, if you're going to do trends, so *one* thing and do it right.  I don't know who is approving these designs, but there's so much ill, fitting and poor quality garbage. Bring back well-fitting, high-quality classic items in gorgeous colors and prints. (Also, going back to number one, you don't have to make *everything* in a print). 

Cousy (in this post) mentions:

...But here's the thing I find confusing. J Crew produced some really nice items this season that sold out lightning fast - the paisley shirtdress, the elephant parade shoes, the cocoon coat in the gorgeous blue color, the #2 pencil in heather chartreuse - and there are many more that I don't remember. So why aren't they taking cues from the things that are selling well (color, print, structure etc.)? The offerings of this fall seem almost willful in their defiance of what customers want to buy. Drab, cheap-looking, common. Every time I see the ugly glen plaid dress or the hideous houndstooth dress with the black side panels I want to have a stiff drink and go to bed. I never thought J Crew would stoop so low.

But maybe this is good news - have the horrendous sales numbers made them realize that they have hit bottom? I think Mickey and gang have it in them to recover and my fingers are crossed that they will.

Personally, I am not too surprised that there was a slowdown in women's apparel and accessories. Why? Take a good look at the sale section. The sale page is overflowing with items that are not moving, no matter what the additional percent off might be.

For many of the reasons listed above by fellow JCAs, I have found myself less and less excited with J.Crew's rollout of new arrivals. Yes, there is still a piece or two that catches my eye (hello Chateau Parka!) However, I use to be excited about the whole roll-out. While I am at it, I use to be excited about getting the catalog in the mail. Now, I don't care if I save it or not.

One of main issues I have this season is poor fit. Everything is boxy and over-sized. For example, I am going down two whole sizes for the Chateau Parka. Most of the online reviewers had to do the same. Why, oh why, is it so huge to begin with???

What do I think J.Crew needs to do:

1. Get back to styling. Learn how to style the way you want your actual customers to wear it. Not the way your ultra-cool-Fashionista-industry-types (you know who I am talking about!) wear it. They can get away with "fashion forward" looks. The college graduate, corporate executive, and everything in-between can not get away with it in every day life. Lately, real life bloggers are rocking this better than J.Crew. Also, fire your current stylists. Really.
2. Quality. Enough said, right? Make sure we don't have to dry clean a cotton tee shirt. For real.
3. Fit. The items that stand the test of time are ones that look like they were tailored for the body. There is a reason the Bella is so well remembered. It is tailored and darted in a way to emphasize the benefits of a woman's body. 
4. Colors. This use to be one of their strengths. Get back to offering rich hues. Plus, offer them during the right season. Where are all the reds, greens, and bright colors for the Holiday roll-out? 
5. Prints. The cutesy prints are okay for a piece or two, but customers do not need any more of them. However stick to offering more classic prints and plaids that you know customers want (hello Black Watch plaid!)
6. Pricing. Why not start with reasonable price point of x, instead of offering a higher price point of y with an additional 25-30% off promo. It just doesn't make sense and it turns customers off. (I just rather wait for it on sale, because I know it will go on sale.)

So I hope J.Crew takes to heart the feedback listed above and throughout the blog. I hope they can turn things around, because I do very much love them!

What are your thoughts on J.Crew's recent earnings? Do you find it suprising or not? What would you recommend J.Crew take action on (if anything)?

J.Crew Profit Down & Sales Up

"Thanks!" to TeriLynn13 (in this post), who shared the following from Fashionista (click here for the article in its entirety):

J.Crew's Sales Picked Up Last Quarter
After a whole lot of markdowns, J.Crew says it has a better handle on its inventory levels.
By Eliza Brooke
September 5, 2014

While J.Crew's creative team is busy preparing for the brand's Fashion Week presentation on Tuesday, its business execs had some pleasant news to report on Thursday afternoon. Sales picked up for the brand in the second quarter of the year, with revenue increasing 12 percent to $627.2 million — this after a season of markdowns that wound up damaging J.Crew's business. Overall, the first half of the year saw 9 percent revenue growth.

On the company's earnings call, execs said that while inventory is still higher than they would like it to be, the percentage of spring and summer product still in stores is lower than it was at this point last year. So, according to them, inventory composition is "healthy."

As might be expected, direct sales are growing at a faster clip than in-store sales — that would be 14 percent ($173.6 million for the second quarter) and 11 percent ($443.5 million), respectively. Comparable company sales also improved over the course of the first half, up 1 percent for the half following a 4 percent rise in the second quarter.

Over at MarketWatch (click here), they share:

J.Crew Group profit declines 38%
September 4, 2014

J.Crew Group Inc. said its second-quarter profit fell 38% as the privately held retailer posted higher revenue amid increased expenses. The retailer... said same-store sales rose 4%.

For the quarter ended Aug. 2, the company posted a profit of $10.8 million, compared with net of $17.5 million a year earlier. Revenue rose 12% to $627.2 million. The company saw an increase in the cost of goods sold as well as in general and administrative expenses. ...

Well mixed news for J.Crew but at least they are getting a handle on their inventory. I know we have talked a lot about this topic before (click here). It's good to see J.Crew taking the right steps necessary. I am also curious to see how well they manage the Spring and Summer inventory now that we are transitioning to Fall and Winter.

Speaking of which, I thought Teacups (in this post), had an interesting take on the situation:

I probably haven't been around the JCA community long enough to recognize if this lull or inactivity is from a collective "crewed out" experience or if it is part of a cycle. For me personally, I would say the current malaise is largely a result of the depressing feeling of visiting the jcrew website. I recognize that they are not the only retail clothing manufacturer who has gotten caught with far too much inventory, but there has to be a better way of managing it than letting items sit in the sale section for the rest of eternity. There has to be some time limit. I don't know if the magic number is 4 months, six months or whatever. I do know that looking at the sale section hovering at about 2000 items makes me not want to even begin to look through it. When you find items you have sitting in your closet languishing month after month, you are less likely to want to wear it or purchase more items which are likely similar. And I love a sale. I just feel like they Jcrew needs to take the hit and move on before all of the joy is gone and I become less interested in the site and the store. I have not given up yet but they need to hurry. 

I love J.Crew sales! It is always exciting to see that coveted item get marked down, and make its way to the home closet. However, there is an abundance of merchandise sitting in the sale section from last year. Just lingering a lot longer than usual, without any additional mark down. As a result, I have been finding myself checking out the sale section less frequently too.

What are your thoughts on J.Crew's performance? What do you predict will happen with their inventory issues moving forward? Do you think J.Crew can reverse their issues?

J.Crew's First Quarter Fiscal 2013 Results

J.Crew recently shared their results for the latest quarter (for the three months ended May 4, 2013). The following are some highlights from the investors call (click here to read the Seeking Alpha article in its entirety):

• Total revenues increased 12% in the first quarter, with the total company comparable sales increasing 3% on a realigned basis. This was on top of a 23% total revenue increase in the first quarter last year and a 16% increase in total company comparable sales.
• Total revenues increased 12% to $564 million.
• Our store sales increased 7% to $380 million, with net square footage increasing 9% versus last year, driven by 8 new store openings during the first quarter.
• Direct sales increased 23% and includes our J. Crew Factory and Madewell direct businesses.
• Gross profit was $252 million, with gross profit margin of 44.7% compared to 47.6% last year. The results reflect a promotional environment that we saw during the quarter, which led to a 280 basis point reduction in our merchandise margin year-over-year.
• Our inventory balance was $308 million at the end of the first quarter compared to $251 million at the end of the first quarter last year. Inventory increased 23% versus last year or 13% on a per square foot basis. 
• ...we are preparing for the opening of our first store in London on Regent Street prior to the holiday, which represents an exciting milestone for us in our international expansion efforts.

There was also a Q&A time with the J.Crew executives. The following two questions I thought were the most interesting:

• Question: When we look at the promotional environment and the hit on gross margin, I mean, do you feel that, that was driven by the need to clear out some of that more let's say cold-weather inventory? And how do you feel that that's going to trend going forward?
  Answer (from Libby Wadle): ...I don't really -- it really doesn't have to do with clearing through, I'd say, cold-weather inventory. I think a few things going on: a tough sort of macro environment out there. I think everyone was feeling the pressure. And with J.Crew specifically, we have a very tough full price comparison, so had some pressure there. And we had to change really how we had planned to do business based on the environment, and we did have to be more promotional. But it wasn't really about sort of leftover inventory as much as it was about sort of navigating through the environment in the healthiest way we could with the inventory we owned.
   
• Question: I am certainly not much of a fashionista, but can you talk a little bit about your fashion trends and how you feel about this summer's versus last year, whether there's enough newness that's going to get consumers shopping, anything you could provide there?
  Answer (from Libby Wadle): Of course. We feel good about our product and our fashion and our newness. What I will say is that, to be frank, we had a lot of competition on our franchise items at much lower price points this year. So what we did really well last year and we had been doing, we invented a lot of great franchise businesses. We saw a lot of that out there in the market and less expensive. So we are -- we remain focused really on innovation, moving forward, inventing new franchises and looking ahead, we feel good about our fashion. So that would be my answer about how we feel about our fashion.

Overall, our favorite retailer is still performing well. Although I am not too surprised to hear about the inventory / increased promotion situation. We have all seen how many {wonderful} back-to-back promotions J.Crew has been offering in the past few months. Plus, it does seem like the Sale section is plentiful right now. I can't really complain except for my spending has increased because of it! ;)

I did find it interesting that J.Crew's competition is starting to impact them though. For the longest time they seemed kind of invincible to the alternative offerings at lower price points. I guess it finally caught up with them. For example, how many of J.Crew's jewelry pieces are getting knocked off for a fraction (and I do mean, a fraction) of the price? 

What are your thoughts on this latest news? Any points you found interesting?

J.Crew Announces Latest Quarter Results

J.Crew recently shared their results for the latest quarter (Q4 2012). The following are some highlights from the investors call (click here to read the Seeking Alpha article in its entirety):

• For the fourth quarter, total revenues increased 21%, with comparable company sales increasing 11% and direct sales increasing 27%.
• For the year, total revenues surpassed the $2 billion mark, increasing 20% over last year. 
• Comparable company sales increased 13%, and our direct sales increased 19%.
  Total revenues increased 21% to $643 million.
• Direct sales increased 27%, which includes our J.Crew factory and Madewell direct businesses. 
• Gross profit for the fourth quarter was $247 million, with gross profit margin increasing 60 basis points to 38.4%.
• Our 2013 plan includes 15 North American stores, including 4 in Canada and 1 store in the U.K. 
• As mentioned during our last call, we signed a lease for our Regent Street store in London, which will open in the fourth quarter this year in time for the holidays.
• We plan to open 13 new factory stores in 2013 including 1 location in Canada, which is in line with our target of approximately 10% square footage growth per year
• Turning to the Madewell. We opened 17 new stores in 2012 and now operate 48 Madewell locations. 
• We will continue to expand our Madewell footprint in 2013, with plans to open 17 new stores and continued growth in our madewell.com business.
• ...we're seeing the trends go online in a much stronger way. I mean ... the customer's shopping seamlessly, I'd say, across in-store and online. But we're absolutely seeing a trend towards the direct business, which is exciting.
• ...a shift in our marketing strategy, where we're redeploying some of the dollars that we had previously used for our catalog marketing into other forms of marketing, whether it be advertising or digital marketing. So that's sort of the high-level, I think, strategy around how we're shifting our marketing expenditures between different formats.

Overall this is great news for our favorite retailer. They are performing very well!

Although I am surprised to hear they are reducing their catalog marketing in favor of other forms. It would explain why so many of us saw those inserts for J.Crew (& J.Crew Collection) in fashion magazines recently.

What are your thoughts on this latest news? Any points you found interesting?

J.Crew Announces Latest Quarter Results {making money!}

"Thanks!" to Kat (in this post), who shared the following from WWD (click here for the article in its entirety):

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.”

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.) ;)

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?

J. Crew in the News: Earns Big This Quarter

As mentioned in the "J.Crew Announces Latest Quarter Results {higher sales!}" post, the fiscal fourth-quarter earnings for J.Crew were impressive. The following is Fashionista's take on it (click here to read in its entirety):

J.Crew Earns Big: Retailer’s Net Income More Than Triples to Over $15M
By Dhani Mau Tuesday
March 20, 2012

As should come as no surprise, J.Crew is raking it in. And so are its top executives. After a somewhat tumultuous year that included a $3 billion buyout, some positive press from Michelle Obama, some not-so-positive press from others (ahem, Fox news), and some great collections, the company has ended up on top.

J.Crew’s reported net income for the quarter ending on January 28 was $15.1 million, versus $4 million one year ago, WWD is reporting. Part of the reason for lower reported income in the past year was that the company went private early in 2011 in a buyout that was costly to the company and left them with high interest rates. However, the company looks to be bouncing back from that just fine.

A better indication of how the company is doing at this point might be the adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), which rose from $51.6 million to $59.5 million.

And if you were wondering how much President and executive creative director Jenna Lyons and Chairman and CEO Mickey Drexler took home, the company released that information as well. Drexler’s base salary, which has not increased since 2003, is $200,000. Of course, that’s in addition to stock options valued at $11.32 million as well as $1.67 million in other compensation and an opportunity for a $1.2 million bonus. Lyons’s salary was an even $1 million, in addition to stock options valued at $2 million.

It’s a good time for J. Crew, which is solidifying itself as a private company, and things can only go up from here.

There was a conference call to discuss fourth quarter results yesterday. To read the transcript, click here. Some quotes worth highlighting:

• Our long-term goal continues to be to grow our North American square footage in the low- to mid-single-digit range annually over the next 3 to 5 years. In 2012, we plan to open 17 retail stores, which includes 3 locations in Canada. We will be opening in Vancouver late in the first quarter, Edmonton in the second quarter, and our second Toronto store at the Eaton Centre in the third quarter.
• we also plan on opening a standalone Men's store at The Grove in Los Angeles in the second quarter
• Our 2012 plan is to open 10 new factory stores, including our first 2 factory stores in Canada.
• We also launched a flat rate shipping program in the third quarter and made enhancements to our website during the year, which have been well received by our customers.
• In addition to our international online and Canadian bricks-and-mortar expansion efforts, we are in the initial stages of exploring opportunities in the U.K. and Asia. We are focused on building our international team to support these expansion efforts and we are currently evaluating opportunities for store openings in 2013.

What are your thoughts on this latest news? Do you think J.Crew's top executives are worth their salaries?

J.Crew Announces Latest Quarter Results {higher sales!}

The following is an article over at Market Watch (click here for the article in its entirety):

J.Crew quarterly profit jumps on sales growth
By Drew FitzGerald
March 19, 2012

J.Crew Group Inc.'s fiscal fourth-quarter earnings soared as sharply higher sales and lower overhead costs helped cover the clothing retailer's debt costs.

J.Crew went private last year in a $3 billion acquisition by a group of investors including private-equity firms TPG Capital--a former owner of J.Crew--and Leonard Green & Partners LP. The move saddled the retailer with higher interest expenses.

Costs tied to the buyout have weighed on the company's results over the past year, often masking stronger sales in recent months.

For the quarter ended Jan. 28, J.Crew reported a profit of $15.1 million, compared with year-earlier profit of $4 million. The latest period included $25.1 million of net interest costs, compared with $528,000 a year earlier.

Revenue rose 13% to $530.9 million as same-store company sales--which include comparable-store sales, direct sales and shipping and handling revenue--grew 6.4%.

Gross margin widened to 37.8% from 37.4%, while overhead costs declined slightly.

Inventories reached $242.7 million, compared with $214.4 million a year ago.

Well, looks like J.Crew is doing pretty, pretty good. That is great news for our favorite retailer!

For those interested (& available), there will be a conference call to discuss fourth quarter results. It is scheduled for tomorrow, March 20, 2012, at 11:00 AM EST. To listen, either call (877) 407-3982 or check out the live webcast at www.jcrew.com.

What are your thoughts on this latest news? Do you think J.Crew is "turning things around" now that they are private?

J.Crew & Latest Quarter Results

A big "thanks!" to Jessica who kindly shared the following article from WWD with us (click here to read in its entirety) that gives us a more in-depth explanation:

J.Crew Logs Q2 Loss on Buyout Costs as Sales Rise
By Arnold J. Karr
with contributions from Jean E. Palmieri
September 1, 2011

Costs related to its March acquisition by TPG Capital and Leonard Green & Partners led J.Crew Group Inc. to a $10.5 million net loss in the second quarter while net, comparable and same-store sales registered gains in the period.

The company disclosed in its Form 10-Q, filed with the Securities and Exchange Commission Thursday, that it had settled a series of shareholder claims regarding the pricing of its acquisition by adding $6 million to the $10 million settlement agreed upon in January. The company said that it “or its insurers” and the two acquiring parties would make a one-time settlement payment of $16 million to be distributed on a pro-rated basis among members of the class who challenged the purchase in Delaware Chancery Court and other state and federal courts. J.Crew recorded a $10 million litigation settlement expense in last year’s fourth quarter and expensed the remaining $6 million in the second quarter.

During the three months ended July 30, the New York-based specialty retailer recorded a net loss of $10.5 million compared to net income of $34.9 million during the prior-year period. Stripping out costs and amortization related to the acquisition as well as interest, taxes, depreciation and amortization, adjusted EBITDA fell 7.6 percent to $64.2 million from the predecessor company’s year-ago level of $69.5 million.

Overall revenues in the quarter rose 6.7 percent to $435 million, from $407.5 million, with store sales up 5.4 percent to $311 million and direct sales up 13.1 percent to $116 million. Comparable-store sales were up 1 percent and comparable sales, which include direct marketing revenues, rose 12 percent. Gross margin declined to 36.5 percent of sales from 44.6 percent with acquisition-related costs, including $23 million in store lease amortization costs related to its acquisition.

On the firm’s quarterly earnings call, James Scully, chief financial and administrative officer, said that the women’s business improved during the second quarter versus the first quarter while there was sustained strength in men’s, accessories and its Crewcuts division. He said the company made “more significant adjustments” to the women’s assortment in the second half, “and we are beginning to see the benefit of those adjustments.”

A company spokeswoman said women’s pants, schoolboy blazers, cashmere, shoes and handbags were among the bestsellers in the period.

Scully also said J.Crew is “moving forward on a number of key strategic initiatives,” including growth internationally, in the direct channel, as well as in the full-line and factory outlet stores. The Madewell division is seen as an expansion vehicle.

The first women’s-only store outside the U.S. opened in Toronto on Aug. 18 and Scully said the company was “really pleased with the results in customer feedback so far.”

He said the firm will open nine new retail stores this year, including one Crewcuts unit. A men’s-only store will open at Columbus Circle in the fourth quarter. Eleven new outlet stores are planned for 2011.

“Our long-term plans remain to grow our factory square footage by approximately 10 percent a year over a three- to five-year horizon through a combination of new units and expansions in existing centers where we see potential upside,” Scully said.

It is interesting to see the repercussions of the acquisition negatively impact J.Crew's latest quarter. Although I doubt it will hurt them in the long run (especially since they will be privately held).

I love that J.Crew was able to turn things around for their Women's collection. If they only had listened to us JCAs from the beginning! ;)

I also love the quote about Canadian shoppers' feedback. Um? Did you read all of them? Because I am pretty sure most were disgruntled about the pricing structure before it got fixed. ;)

What are your thoughts on this latest news? Any points you found interesting?

J.Crew Talks Latest Quarter Results

Yesterday's "J.Crew Announces Latest Quarter Results {Q1 loss}" post quickly announced J.Crew's losses this past quarter.

A big "thanks!" to Jessica who kindly shared the following article from WWD with us (click here to read in its entirety) that gives us a more in-depth explanation:

J. Crew Reports $29.9M Loss
By David Moin with contributions from Evan Clark
June 9, 2011

Fashion misses had J.Crew Group Inc. seeing red in the first quarter, but executives stressed they’ve made corrections in the women’s assortment involving fashion content and inventory levels.

“Very simply, we underbought the best goods and categories,” Millard “Mickey” Drexler, J.Crew Group’s chairman and chief executive officer, told WWD. “In more cases than we would have liked, we didn’t have for our customers what we should have had.”

On Thursday, J.Crew posted losses of $29.9 million on revenues of $409.5 million for the first quarter ended April 30. A year earlier, J. Crew registered profits of $44.7 million on revenues of $413.9 million.

Same-store sales dropped 6 percent, versus a 15 percent increase in the year-ago period, and there was a 3 percent decline in comparable revenues, which includes store sales, direct sales and other sources of revenue. The retailer, which had been on a roll for a long time, started to slow midway through last year as it cut a $3 billion deal to be taken private by TPG Capital and Leonard Green & Partners. The transaction was completed March 7. J.Crew releases financial results because of public debt.

“We missed a bit on the fashion novelty end of the business, but we feel very comfortable that has been fixed,” Drexler said. “It’s all about product, as it always is in our business, and frankly every other business.”

Drexler acknowledged not being “well balanced in the agelessness and timelessness of our assortments” and cited a lack of full-length sleeves, too many at three-quarter length, and skirts that were “a little too short.…They’re not anymore,” he assured.

The quarter wasn’t without some upsides. “We continued to strengthen our franchise businesses — cashmere, pencil skirts, blazers, ballet flats — those categories where we have leadership and customers come back to us day in, day out,” Drexler said.

He also cited strength in Crewcuts, accessories and men’s wear, as well as Madewell, where the attitude is getting increasingly bullish. Madewell is opening 13 stores this year, taking the chain to 33 units, in addition to recently launching madewell.com.

In an earlier conference call, James Scully, chief administrative and financial officer, noted: “While we are disappointed in the year-over-year decline in first-quarter earnings, it is worth noting that last year was an historical peak by a significant margin.”

Scully sees “continued weakness” in the top line through the first half of the year. However, “The good news is comparisons get easier in the back half.”

Also, “year-over-year declines in Q2 will not be worse than it was in Q1,” Scully said referring to gross margins, which fell to 44.3 percent of sales from 49 percent on increased markdowns and promotional selling, as well as accounting changes related to the deal taking the company private. Adjusted earnings before interest, taxes, depreciation and amortization, eliminating costs from the transaction, fell 16 percent to $74.7 million from $88.9 million.

“We feel comfortable inventories will come in line with sales as we move through the second quarter and second half of the year,” added Stuart Haselden, treasurer.

Promotional activity in the second quarter “won’t be any worse than Q1.…We’re hoping that it’s better.” Industry analysts noted Thursday that J.Crew isn’t the only retailer hitting headwinds in women’s. Through the industry, there’s been a lack of newness, high inventories, quality being compromised to mitigate inflationary cost increases, rampant discounting of brands online and exorbitant gas prices pinching spending, primarily at the low and midtiers.

Still, despite its recent weakness, women’s will continue to remain the biggest piece of the J.Crew business, according to Libby Wadle, executive vice president, retail, factory outlets and direct. “We still have franchise [women’s] businesses that we are not walking away from.” In addition, the company will emphasize more novelty items, prints and color. “As we get back into those businesses, we feel better positioned,” Wadle said.

J.Crew is also sticking to its plan to increase retail square footage in the low- to mid-single digits annually over the next three to five years. J.Crew is opening nine stores in 2011, including one Crewcuts and the first J.Crew in Canada in September. The Web site goes live late summer in the U.K. The company is also looking at Asia and other parts of the globe for possible expansion, but is early in the process.

The outlet business is another growth vehicle, with 10 percent annual increases in square footage seen over the next three to five years through store expansions and new stores.

Couldn't agree more with not having enough of the popular inventory. I ordered the Oxford Ballet Flats (Item 36226; $138.00) back in January or February and they were already wait-listed for May. Then I got an email in April stating that my ordered was cancelled. I checked the website and my size was available, but with a new wait-listed date for August. So I decided that I didn't need them that bad and did not re-order my full price purchase.

As for the skirt comment... YES! The skirts are too short! It felt like most of the skirts were 18" or shorter. I don't mind the length for some skirts being short, but give me some knee length skirts (and not just in pencil skirt shapes). As a result, I ended up buying about 10 (yup, 10!) skirts from Anthropologie this Summer (so far).

What are your thoughts on this latest news? Do you think of Mickey Drexler analysis? Any points you found interesting?

J.Crew Announces Latest Quarter Results {Q1 loss}

The following is an article over at Wall Street Journal (click here for the article in its entirety):

JCrew Swings To 1Q Loss On Buyout Costs, Added Promotions
By Tess Stynes
June 9, 2011

J.Crew Group Inc. swung to a loss in its fiscal first quarter on costs related to its takeover in March and as the apparel retailer's results were hurt by increased markdowns and promotions.

The company was taken private in early March in a $3 billion acquisition by a group of investors including private-equity firms TPG Capital--a former owner of J.Crew--and Leonard Green & Partners LP.

J.Crew became the darling of Wall Street in the recession as penny-pinching shoppers continued to snap up its embellished cardigans, skinny jeans and cargo pants. The brand has several high-profile fans, including First Lady Michelle Obama.

For the quarter ended April 30, J.Crew reported a loss of $29.9 million, compared with prior-year earnings of $44.7 million. The latest period included $32.2 million of costs related to the takeover.

Revenue decreased 1% to $409.5 million as store sales fell 3% and were partly offset by 5% growth in its Internet and phone business. Same-store company sales declined 3%, compared with 16% growth a year earlier.

Gross margin fell to 44.3% from 49% on increased markdowns and promotions as well as on acquisition-related costs.

J.Crew said the latest period figures include results from before and after the acquisition, and while not directly comparable, the numbers provide a meaningful view of its operating results.

Interesting... especially the increase in markdowns and promotions. The article never really states what the reason behind the increase is. I have some suspicions behind it, but it would be interesting to hear what J.Crew believes is causing it.

As for the takeover, at least it is over! Not sure what to expect though now that it is done.

What are your thoughts on this latest news? Do you think J.Crew will "turn things around" now that they are private?

J.Crew Takes a Dip

"Thanks!" to Jessica who kindly shared the following article from WWD with us (click here to read in its entirety):

J. Crew Profit Shrinks 90% in Q4
By Vicki M. Young
March 22, 2011

In what is likely to be its last annual regulatory filing, J.Crew Group on Monday said fourth quarter income fell 90 percent.

The specialty chain, which became private on March 7 upon the completion of its acquisition by affiliates of TPG Capital and Leonard Green & Partners, said income for the three months ended Jan. 29 fell to $4 million, or 6 cents a diluted share, from $40.4 million, or 61 cents, in the same 2009 quarter. Total revenues rose 2.4 percent to $471.5 million from $460.6 million. Same-store sales for the quarter were not reported in the filing.

The annual report, ...gave no details on why profits declined so sharply although company executives had warned last month that the retailer faced significant challenges.

For the year, income fell 1.5 percent to $121.5 million, or $1.84 a diluted share, from $123.4 million, or $1.91, in 2009. Total revenues rose 9.1 percent to $1.72 billion from $1.58 billion. The company said same-store sales rose 4 percent for the year.

The firm said that by operating division, revenue from its stores rose 7.4 percent to $1.19 billion from $1.11 billion, while that from its direct channel gained 14.6 percent to $490.6 million from $428.2 million.

By segment category, the men’s business grew in 2010, while the women’s category declined. Women’s was 62 percent of the business compared with 65 percent in 2009.

Very interesting news! I am honestly shocked that the last quarter's income fell 90%.

In all honesty, I can understand why there is a drop (although not that steep!) My own shopping in the last two months has dropped significantly. During the holiday season, I had been calling my personal shopper practically everyday. Now, not so much. Even the latest Mickey Green Card is not enough to get me to buy like I use to at their stores (and I am trying, but I can't seem to make the $150 minimum!)

My closet is just so full of J.Crew items that it's hard to justify buying another striped tee (although, they are so pretty!) The few pieces I do buy seem to come from eBay (finding those J.Crew items from seasons past that I missed out on). I have even been upping my visits to other stores, like Anthropologie and Banana Republic (they have been running some amazing sales, which always get me!)

But back to the article... I am not at all surprised that the men's collection is doing well. Their line has been consistently offering great classic styles with updated cuts. Bravo Frank! Here is to hoping J.Crew can turn things around for the ladies collection! :)

What are your thoughts on the latest financial news? Can you believe that J.Crew income for their last quarter fell 90%? What do you think J.Crew can do, to turn things around?

It's Official! {shareholders approve J.Crew buyout}

"Thanks!" to many of you, including xoxo (in this post), who shared the following news: J.Crew's deal to go private is done.

The following is from the Huffington Post (click here for its entirety):

J.Crew Shareholders Approve $3 Billion Buyout
March 1, 2011

Shareholders of preppy clothing seller J.Crew Group Inc. have approved a $3 billion deal to be taken private by two investment firms.

The $43.50-per-share buyout by private-equity firms TPG Capital and Leonard Green & Partners is expected to close on or near next Monday. J.Crew CEO Millard (Mickey) Drexler, the former Gap Inc. chief credited with turning J.Crew around since coming aboard in 2003, will remain with the company.

Questions about how the deal was negotiated by Drexler had raised concerns the deal might not be approved. Proxy advisory firm Institutional Shareholder Services last week had recommended against the deal.

Hedge fund Mason Capital Management's managing member Michael Martino wrote to J.Crew's board on Feb. 11 and asked it to hold out for a higher offer. The firm has a 7.5 percent stake in J.Crew, which is based in New York. They said they would vote against the offer, according to an SEC filing.

J.Crew began an 85-day "go shop" period when it would entertain other bids after it agreed in November to be bought by TPG and Leonard Green. It extended the period by a month after settling a shareholder lawsuit challenging the acquisition. Even after the extension, J.Crew said it was in talks with some interested parties but did not receive any firm alternative bids.

J.Crew and Drexler have a history with TPG, which took a majority stake in J.Crew in 1997 and remained majority shareholder until the company went public in 2006.

Shares rose 45 cents to $43.53 in midday trading, pennies above the buyout price.

This is very interesting! Just awhile back, an influential shareholder adviser recommended that shareholders vote against the proposed buyout because of all the issues. Now it's all settled. Uh, okay. ;)

What are your thoughts on the deal? Are you surprised that this latest development is now occurring?

J.Crew's Time To Go Private Will Wait

"Thanks!" to many of you, including WellFedFred (in this post), who shared the following news.

Well, well, well. Just when you think the story about J.Crew's deal to go private has an end, another surprise pops up.

The following is an excerpt from New York Magazine's the Cut (click here for its entirety):

J.Crew Accuses Angry Shareholders of Being Greedy
By: Amy Odell
February 2, 2011

Shareholders unhappy with J.Crew's plan to go private, and the settlement they agreed to after suing the retailer, are trying to get more money from the chain. Having accused it of wrongly manipulating the settlement in their favor, they're now asking for "very significant monetary recovery" from J.Crew. J.Crew's lawyer has responded in a letter to the judge ruling on the case: "Having largely reaped the fruits of their bargain, plaintiffs now want to renege."

What happened to cause this? For a quick explanation (from here):

J.Crew reached a settlement with shareholders who sued the company after it announced plans to sell itself to a private equity firm for $3 billion. Under the settlement, J.Crew agreed to extend the go-shop period to February 15 to solicit rival bids that shareholders could vote on. However, a lawyer for the shareholders now argues that J.Crew manipulated the process by scheduling a vote on the bid for March 1 and announcing the results of the initial go-shop period, during which no other bidders emerged.

For more articles regarding this, check out:

• "Behind the Collapse of the J. Crew Settlement" [NY Times Dealbook]
• "J.Crew Threatens to Countersue Shareholders" [Women's Wear Daily]
• "J.Crew Shareholders Back Out of Settlement" [Thread NY]
• "J.Crew's Angry Shareholders Are No Longer Happy With Their Settlement" [New York Magazine]
• "J.Crew and the $3 Billion Deal Hangover" [Wall Street Journal]
  

It's interesting that J.Crew believes its shareholders are greedy. Are the shareholders the only ones? Some might argue that certain members of J.Crew and its buyer (in initial dealings) were acting greedy too.

J.Crew could have had a smooth transition to private by now if J.Crew and its Buyer (TPG Capital and Leonard Greene & Partners) were transparent from the very beginning (having the entire board aware of the deal to go private, fair evaluation of stock for shareholders, etc.). Because of those actions, the Buyer and J.Crew's reputations have been slightly damaged. And now there is talk that the Buyer & J.Crew will sue shareholders. Even if they win, there will be a significant loss.

I still have no doubt that J.Crew will be private, but its now a question of when and how much additional money it will cost them.

What are your thoughts on the deal? Are you surprised that this latest development is now occurring?

No Takers For J.Crew {except TPG & Leonard Green}

J.Crew's deal to go private is a hot topic discussed on this blog (refer here, here, here and here). The following is an article from Reuters (click here to read in its entirety):

J.Crew received no rival takeover bids: source
By Jessica Hall
January 16, 2011

J.Crew Group Inc received no rival takeover bids during its "go shop" period and will remain with its original $2.86 billion buyout offer from TPG and Leonard Green, a source familiar with the situation said on Sunday.

Sears Holdings Corp, Urban Outfitters Inc and at least two other private equity firms had been looking at the financial books of J.Crew during the "go shop" period that allowed J.Crew to solicit other suitors, sources previously told Reuters.

Well this is quite the news! I am happy to hear that both Sears and Urban Outfitters have no plans to acquire J.Crew. (I just didn't see it working out, not well at least.) As someone mentioned in another post, maybe Sears & UO were using the old "possible-bid-excuse" to check out J.Crew's financial figures. Sneaky. ;)

With just TPG & Leondard Green's offer on the table, J.Crew's CEO Mickey Drexler is breathing a bit easier now. (Of course, there are those pesky stockholder lawsuits to still worry about.)

What are your thoughts on this latest news? Do you think Urban Outfitters or Sears were ever really interested in acquiring J.Crew? Do you think going private is still the right move for J.Crew?

J.Crew's Deal To Go Private With Sears & UO {crazy rumors you say?!}

J.Crew's deal to go private is a hot topic discussed on this blog (refer here, here and here). The following is an article from the Motley Fool (click here to read in its entirety):

The Crazy Rumors Surrounding J.Crew
By Alyce Lomax
January 6, 2011

According to those notoriously gabby "people with knowledge of the matter," a pair of unlikely candidates are mulling the idea of placing bids on J.Crew.

In late November, word broke that TPG Capital and Leonard Green & Partners planned to buy J.Crew -- and take it private -- in a transaction valued at $3 billion, or $43.50 per share.

There's a giant "say what?" attached to the rumors, though. Two supposed contenders may be trying to snap up J.Crew first: Sears Holdings and Urban Outfitters.

• Why?! Urban Outfitters does just fine on its own, growing organically with new, fresh retail concepts that it dreams up in house. Although J.Crew and Urban Outfitters are both known for being run by excellent merchants, their basic target customers -- preppie types vs. the individualistically bohemian -- are a little too mismatched.
• What?! Sears Holdings sure could use a shot in the arm, but good grief, it can't even handle running the retail concepts it already has with much success. The second anybody caught on that J.Crew was now run by Sears, or heaven forbid, being sold in Sears (which happened to Land's End), the good times are over for J.Crew's brand. That would leave Sears with yet another fumbled brand.

I suppose anything's possible, even if the rumor in question sounds nonsensical. I can only hope that J.Crew investors don't expect some kind of crazy bidding war like the one Dell and Hewlett-Packard waged for 3PAR last summer, driving the price for the company ever higher. Chances are that the private equity buyout that's already on the table is about as good as it's going to get for J.Crew shareholders.

What do you think? Would bids from Urban Outfitters or Sears make sense? Would some other retailer be a better fit with J.Crew?

I guess we are not the only ones who found this news (about Sears & UO both planning to buy out J.Crew) a bit odd.

J.Crew's transition to private keeps getting more and more interesting (almost gossip-like). I can't wait to find out what the next twist in the developments will be. ;)

What are your thoughts on this latest news? Do you think the news about Urban Outfitters or Sears interest in acquiring J.Crew are just rumors? Do you think going private is still the right move for J.Crew?

J.Crew's Deal To Go Private {it just got more interesting}

We have been tracking J.Crew's deal to go private for some time now (click here and here). Well, it just got more interesting. The following is an article from the New York Times' Dealbook (click here to read in its entirety):

Sears and Urban Outfitters Circle J.Crew
By Michale J. De La Merced
January 5, 2011

The “go-shop” provision in the $3 billion proposed buyout of J.Crew has now attracted window shoppers.

Several retailers, including Sears Holdings and Urban Outfitters, have been studying J.Crew’s books, according to people with direct knowledge of the matter. Urban Outfitters is seriously weighing a counterbid for the high-flying preppy retailer.

J.Crew, the clothier of choice for the likes of Michelle Obama, agreed on Nov. 23 to sell itself for $43.50 a share to buyout firms TPG Capital and Leonard Green & Partners. The agreement included a “go-shop” provision that allows the company to entertain rival offers until Jan. 15.

A key part of that transaction was the support of J.Crew’s chairman and chief executive, Millard S. Drexler, who turned around the company and owns a 11. percent stake.

While keeping Mr. Drexler on board would crucial to any successful suitor, that may not be the case with Urban Outfitters, which has a well-regardeed management team. ...

There are lots of articles discussing this news including:

• Bloomberg
  ["Sears, Urban Outfitters Said to Weigh J. Crew Bids"]
• BusinessWeek
  ["Sears, Urban Outfitters Said to Weigh J. Crew Bids"]
• 24-7 Wall St
  ["Rival J. Crew Bids Could Bring CEO Drama and Showdown"]
• "Thanks!" to D for sharing the article in New York Post
  ["Drexler's wary about 2 new J. Crew suitors"]
• "Thanks!" to Heidi for sharing the article in NY Mag
  ["Sears and Urban Outfitters Might Submit Bids for J.Crew"]
  

The way this original deal (between J.Crew and TPG Capital / Leonard Green & Partners) came about was a bit shady (with Drexler arranging a deal before notifying the full J.Crew board). No matter who J.Crew sells out to, Drexler will be making lots of money off this deal. But will he get to keep his job if it's not with TPG Capital / Leonard Green & Partners?

With that said, I am not sure how I feel about Sears Holdings or Urban Outfitters taking over J.Crew. Sears does a fine job with Lands End and Urban Outfitters does a great job with Anthroplogie, but I like J.Crew's offerings and customer service a lot more. I hate to see it change.

What are your thoughts on this latest news? Do you think Urban Outfitters or Sears would be a good match with J.Crew? Do you think going private is still the right move for J.Crew?

J.Crew's Deal To Go Private {you've got some explainin' to do}

"Thanks!" to wellfedfred (in this post) and my husband (who left me the article this morning to read) about the most recent news from WSJ about J.Crew's deal to go private (click here to read in its entirety):

Inspecting J. Crew Deal in the Mirror
By Dennis Berman
November 30, 2010

It may be well-accessorized for the season, but something still looks off about the leveraged buyout of J.Crew Group Inc.

Its $3 billion final price is defensible. And the transaction got all the proper legal sign-offs. Yet as private equity returns to the markets anew, it is important to see the buyers' opportunism at work.

Shareholders, take note of just how conveniently things fell into place for the company's new prospective owners—who happen to include its celebrated chief executive, Mickey Drexler, and its most influential board director, James Coulter. He is a founder of buyout shop TPG Capital, which is paying for most of the deal.

For TPG, the deal lets it put some of its $18.8 billion in cash to work in a company it owned once before. For Mr. Drexler, it's a chance to reinvest a third of the $330 million windfall he has already made as an 11.8% owner of J. Crew. More equity is likely on the way in this current deal, too..

TPG first took J. Crew private in 1997, and after a subsequent public offering, sold its final shares by 2009, clearing seven times its original investment. Still, Mr. Coulter has remained on the board.

Full details of the deal's origins will be released in coming weeks, and representatives for the parties involved weren't willing to comment. People close to the matter say TPG first made its interest known to Mr. Drexler. Under ideal circumstances, a CEO would instantly report this to his board, ensuring it kept full control of any sales process. The less time lapses, the more a board can manage the flow of information, dictate the terms of any offer and set the parameters for a CEO's engagement. That doesn't appear to have happened here.

It all recalls the $11.5 billion buyout of pipeline company Kinder Morgan Inc. in 2007, which was led by Chief Executive Rich Kinder and buyers including Goldman Sachs Group Inc. In that deal, it took two months before Kinder's board knew its CEO was plotting a buyout. Just last week, the company filed for an IPO, which Morningstar suggests will value the company at double its 2007 price.

Indeed, it was a number of days before Mr. Drexler alerted J. Crew's remaining seven board members, say people close to the transaction. They convened a special committee, which in turn hired bankers and lawyers to wrestle over how to proceed. The early days of the process were "messy," says one person close to the deal. The special committee did the best it could under the circumstances, rejecting the buyers' first $41-a-share offer. But TPG and Mr. Drexler, known as a "prince of retail," found themselves in a convenient circumstance.

The company was on track to post lousy third-quarter results. That was expected to hit the stock hard. People close to the transaction thus say the offer is welcome salvation for shareholders, who bought the company expecting growth and now would be paid a premium for their stock.

Another way to look at the $43.50-a-share offer is a way to time a J.Crew purchase at its weak moment. The stock is trading well below its 52-week high of $50.96. Indeed, in the deal's final days, the buyers "retraded" in Wall Street parlance, cutting its $45-a-share agreement at the last moment, says a person close to the deal. J.Crew does have time to find a better deal. And shares continue to trade at a price above the offer, a sign shareholders expect other buyers to materialize.

How shareholders feel may be a waning concern. Mr. Drexler and crew scrapped a planned live conference call last week and played a recorded message instead. It was almost as if Mr. Drexler was patting holders on the head as the company issued a curt, recorded goodbye: "Thank you for your time and interest in J.Crew."

Well this article doesn't make me feel warm and fuzzy about being a shareholder. That is for sure. The question of why does J.Crew have to sell immediately before shopping around is a good one.

What are your thoughts on this latest news? Are you a shareholder? Do you feel this deal will benefit shareholders properly.

Calling All J.Crew Shareholders

As mentioned in the "J.Crew To Be Taken Private" post, J.Crew agreed to be taken private in a $3 billion deal.

The following is an article over at Market Watch (click here for the article in its entirety):

Buyout of J.Crew Group, Inc. Investigated by Securities Lawyers at Goldfarb Branham LLP
By MarketWatch
November 29, 2010

Goldfarb Branham LLP is investigating whether the Board of Directors of J.Crew Group, Inc. breached their duties to shareholders by agreeing to sell the company to TPG Capital and Leonard Green & Partners, L.P. for $43.50 per share in cash. Concerned J.Crew investors are urged to contact securities lawyer Hamilton Lindley to ask about their rights and remedies due to this buyout at 877-583-2855 or hlindley@goldfarbbranham.com.

"Because the stock traded as high as $47 per share in of May 2010, and also because at least one analyst believes that the stock is worth $50 per share, we believe this deal is suspicious," said securities attorney Hamilton Lindley. "Our proposed class action lawsuit seeks to ensure that J.Crew shareholders receive full and fair information and the best price reasonably available in this buyout."

Goldfarb Branham LLP represents shareholders and whistleblowers nationwide and has been appointed by courts to serve as lead counsel on behalf of shareholders. The firm represents stockholders at no cost or liability to investors. For more information about this management led buyout, please contact the firm at 877-583-2855 or hlindley@goldfarbbranham.com.

This deal will likely go through. However, it will be interesting though to see what comes of this investigation.

What are your thoughts on this latest news? Are you a shareholder? If so, will you contact the law firm?

J.Crew To Be Taken Private

"Thanks!" to so many of you, including those who participated in the discussion from two posts this past week (here & here), as well as wellfedfred (in this post), Suzy (in this post), ThirtySelvedge, Ellen, Naomi, & Kim, who shared the following news. J.Crew's management is in the works to be taken private.

There are lots of articles discussing this news including:

• J. Crew makes deal to be taken private for $3B
• Mickey Drexler Plowing $100 Million of His J.Crew Stock into Company Buyout
• Mickey Drexler to reap 15 times his J. Crew stake
• Mickey Drexler to profit from J. Crew buyout
• Lessons from J. Crew: How to Protect Investors in Management Buyouts
• Tripp Levy PLLC Represents J. Crew Shareholders In Connection With Management Buyout
  

There is also the latest article from SFGate (click here to read in its entirety):

J.Crew shareholder sues over buyout
By Bloomberg News
November 27, 2010

J.Crew Group Inc. and San Francisco's TPG Capital were sued by a J.Crew shareholder seeking to block the clothing retailer's proposed $3 billion buyout, which he said undervalues the company.

The acquisition of J.Crew by TPG and Leonard Green & Partners LP for $43.50 per share "materially undervalues" the company and is unfair to stockholders, shareholder Arnold Church said in a complaint filed Wednesday in New York State Supreme Court.

"In short, the proposed acquisition is designed to unlawfully divest J. Crew's public stockholders of the future growth potential of the company by engaging in an unfair process riddled with self-dealing," the complaint states.

J.Crew announced the buyout by TPG and Leonard Green on Tuesday. The lawsuit seeks class-action status on behalf of J.Crew shareholders, according to the complaint. Besides J.Crew and TPG, the complaint names as defendants Leonard Green and J.Crew officers and directors, including Chief Executive Officer Mickey Drexler.

Hmmm. Not sure how I feel about this news as both a customer and shareholder (who purchased stock in the high 40's).

I know Mickey will be making lots of money off this deal, but will the shareholders?

What are your thoughts on this latest news? Do you think this is the right move for J.Crew? What do you think this mean for shareholders?

J.Crew's Outlook Takes Another Hit

The following is an article from Bloomberg (click here to read in its entirety) about J.Crew's most recent performance:

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.

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.

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?