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J.Crew's Women's Collection Is Driving Store Profitability Down

The retailer saw its comparable sales drop 2 percent in the third quarter.

Having opened its fourth store in London and its first Williamsburg location in September, J.Crew saw sales grow 6 percent to $655.2 million during the third quarter, which ended Nov. 1. That sounds decent, until you look at comparable sales — a metric that excludes the revenue boost the company gets from adding new stores to its network — which dropped 2 percent.

Across its various channels, J.Crew is growing more slowly than it has in years past. Brick-and-mortar sales grew 4 percent (compare that to 2013's 7 percent growth for the same time period), lagging behind online sales, which grew 10 percent to $207.8 million. But even e-commerce is moving at a sluggish pace relative to last year, which saw a 21 percent increase in sales for the third quarter.

Women's is also struggling compared to the men's category. That's especially true offline: In its quarterly financial statement released Thursday afternoon, J.Crew noted that the lackluster performance of women's apparel and accessories has been the big driver in the "significant" drop in store profitability. That trend is likely to continue into the first quarter of next year, the company says.

If there's an upshot here, it's that Madewell is growing at a good clip: sales were up 32 percent for the third quarter. The plan is to open another 20 stores next year. J.Crew, for its part, is still working on international expansion, with its first Paris location opening in March. 

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