The ongoing J.Crew-needs-a-major-turnaround-and-fast saga continues. On Monday afternoon, the retailer released its earnings results for the first quarter of fiscal 2017, and things haven't improved much since last year. In fact, they've gotten worse.
For the company as a whole, revenue decreased 6 percent to $532.0 million, with comparable sales down 9 percent. Those numbers would have been even worse without the inclusion of sister brand Madewell, where sales increased 17 percent as a whole and 10 percent on a comparable basis. At J.Crew, sales decreased 11 percent, with comparable sales down 12 percent. This marks an 11th consecutive quarterly decline, according to Bloomberg.
"While we are disappointed with our first quarter earnings, we are optimistic regarding the work we have underway to improve our business," said Chairman and departing CEO Mickey Drexler in a statement. "We have a clear vision and action plan in place to meet our customers' needs — wherever and however they choose to shop. I look forward to transitioning my role to chairman and to working with our new CEO, Jim Brett, as he takes the reins in July and continues to position J.Crew for long term success."
Part of that plan, as has already been announced, was eliminating 250 positions (primarily at J.Crew headquarters), and reorganizing the company's executive management structure. Announced Monday, there will also be store closures this year. While the company plans to open as many as 10 new Madewell stores in 2017, it also plans to shutter a total of 20 stores. While it was not specified how those closures will break down by brand, it feels safe to assume that the majority won't be Madewell. The retailer is also offering a debt swap to lenders to buy more time for its turnaround, which Bloomberg explains in more depth.
During a conference call for investors and analysts on Monday, executives from the company expanded on its strategy to turn things around. The company's President, COO and CFO Mike Nicholson said they have spent the past few months doing "in-depth analysis" of "every aspect of the business" and assessing customer feedback to identify the problems the company needs to address and how. One area of focus will be merchandising and design: Chief Merchandising Officer Lisa Greenwald, alongside Head Designer Somsack Sikhounmuong, will focus on better aligning design and merchandising, bringing quality and "stronger value" to classic looks and adding new categories and styles. Another area is pricing; Nicholson says the company is focused on "evolving pricing architecture to align with customer expectations and improving value perception." Then, there's marketing: J.Crew plans to "reinvent" its famous catalog, or "style guide," scaling back on deliveries and reinvesting those resources on more digitally focused marketing initiatives that it hopes will have a stronger impact in terms of driving actual sales.
In addition, Nicholson said the company would be exploring "opportunities for additional points of distribution" to reach more customers, through both "domestic wholesale" partnerships and franchise partnerships to beef up international presence — mentioning the Middle East, specifically. Just last year, J.Crew entered its first U.S. brick-and-mortar wholesale partnership with Nordstrom. It also sells through Net-a-Porter and Bon Marché.
That's all on top of previously outlined plans to execute omnichannel capability improvements, operational efficiency improvements and various cost-cutting measures.
Brett certainly has his work cut out for him.