Wednesday, March 18, 2015

Madewell's Cool Girl Style Is Hitting Home With Shoppers, While J.Crew Lags

Madewell's Cool Girl Style Is Hitting Home With Shoppers, While J.Crew Lags:

J.Crew's fall 2015 presentation during New York Fashion Week. Photo: Fernanda Calfat/Getty Images
J.Crew's fall 2015 presentation during New York Fashion Week. Photo: Fernanda Calfat/Getty Images
The collection J.Crew presented during New York Fashion Week in February was a classic Jenna Lyons production: blazers, bright and sumptuous knits, touches of bling, windswept hair tucked into scarves.

But while Lyons's quirky-preppy aesthetic elevated J.Crew to cult status at the turn of the decade, it's not bringing customers out in droves anymore. Reporting its financial stats for 2014 on Wednesday morning, J.Crew noted that. in stores that have been around for at least a year, sales decreased 1 percent. That drop was magnified in the final quarter of the year, with a 5 percent decline.

The failing, J.Crew CEO Mickey Drexler said on the company's earnings call, lies in the women's collection specifically. A lapse in attention to the clothes' fit turned off customers, and the design and merchandising teams are working to fix that problem, with some of the improved product already in stores.

"It's important for us to maintain consistency in branding. Customers don't like to guess at what's going on in this business," Drexler said. "The Mercedes star has been the Mercedes star. An iPhone looks like an iPhone. I don't think J.Crew women's looked like J.Crew women's as much as it could have, nor did we market it as much as we could have."

And in a promotion-heavy retail environment, it can be hard to convince shoppers to buy full price clothing. In order to do so, Drexler says, you have to have the right goods at the right price in the right color in their size, with good service.

"[Our customer] is loyal as hell until we get it wrong," Drexler says. "Then she wants it on sale."

Given J.Crew's aforementioned product missteps, you see the challenge. By contrast, Madewell, which recently entered a new phase of retail expansion, is surging full steam ahead. Continuing to sell a younger, more tomboyish aesthetic that plays heavily on the trope of the cool French girl — don't tell us you're not a sucker for it — the brand's sales increased 35 percent during the year to $245.3 million. Comparable sales (again, just those stores that have been around for the full year) rose 14 percent after growing 9 percent last year.

Unfortunately for the company as a whole, Madewell represents a relatively small portion of overall sales: Compare its $245.3 million in sales to the $2.3 billion J.Crew brought in. We'll be looking to see what execs think the fix should be.

Update: This post has been updated to include commentary from J.Crew's earnings call.

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