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J.Crew to Close 2 of Its Brands Even as It Returns to Positive Sales Growth

It looks like ousted CEO James Brett did have a positive impact on the company in his short tenure after all.
Photo: Courtesy of J.Crew

Photo: Courtesy of J.Crew

After 15 months on the job, J.Crew CEO James Brett left in mid-November following disagreements with the company's board on turnaround strategy. But based on its latest earnings report, Brett's plan was starting to work. On Thursday, J.Crew, Inc. announced that in the third quarter, total comparable store sales rose 8 percent — the largest jump in more than five years — while comparable sales at J.Crew, the brand, rose 4 percent. That's significant — the brand had seen declining sales throughout the past four years. This time last year, they were down 13 percent. Comparable sales at the always-moneymaking Madewell jumped 22 percent in the quarter.

Left without a CEO, J.Crew executives have divided up Brett's responsibilities, and already made a couple of major decisions that reverse ones he made. According to an internal memo obtained by the Wall Street Journal. J.Crew has decided to close two of its sub-brands: Mercantile, a lower-priced line that began selling on Amazon as part of Brett's strategy to ramp up wholesale, and Nevereven, a more trend-driven line that launched so recently (about 17 days ago) and quietly, you probably didn't know it existed. (You could say it Nevereven had a chance.) A source confirmed to Fashionista that the two lines would be winding down. The Journal reported earlier this month that Brett and the board members clashed over these two brands, specifically.

The memo also reportedly noted that J.Crew would be exiting the home goods category as well, and phase out some sub-brands "in the interest of creating greater clarity for consumers." Two of Brett's hires will be leaving the company as a result: Aaron Rose, chief of emerging business and value brands, and Geren Lockhart, head of emerging brands.

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However, despite these clashes, during a conference call Thursday to discuss earnings, J.Crew executives spoke positively about the brand's September reboot — calling out a new aesthetic, a wider range of price points and extended sizing as being particularly successful. They even highlighted the brand's "sub-brand strategy," mentioning Mercantile, but not Nevereven, by name, in addition to other new brands 365 and Point Sur. Aside from product, J.Crew's new rewards program and ramped-up digital marketing efforts were said to have succeeded in bring in new customers, while its inclusive-looking "New Crew" campaign drove 250 million social media impressions.

It will certainly be interesting to see what other parts of Brett's strategy end up on the chopping block, and how J.Crew's future earnings will fare as a result. No doubt, we'll be keeping tabs.

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