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J.Crew Hopes Sustainability Progress at Madewell Will Attract Investors Ahead of IPO

It's further evidence that investors are taking the issue seriously.
Photo: Chinos Holdings, Inc. (to be renamed Madewell Group) prospectus

Photo: Chinos Holdings, Inc. (to be renamed Madewell Group) prospectus

Before a company goes public, it advertises itself to potential investors through a prospectus. In addition to financials and details about a company's structure, the prospectus might also make a case for why the company occupies a unique space in the market; at Revolve, for instance, it emphasized the retailer's aptitude for influencer marketing.

In spinning off Madewell into its own, public company — which J.Crew just announced it is in the process of doing — one might think the denim brand's rapid growth with crucial millennial consumers would be enough to get investors interested. But, notably, the company emphasized a couple of other characteristics as selling points: sustainability and inclusivity.

Photo: Chinos Holdings, Inc. (to be renamed Madewell Group) prospectus

Photo: Chinos Holdings, Inc. (to be renamed Madewell Group) prospectus

There's a summary of the brand's inclusive size ranges and, later, its commitment to sustainability. "Sustainability is an integral part of our DNA," it reads. "We strive to conduct our business in ways that we believe will benefit our planet and our stakeholders, with a broader goal to inspire progress across our industry. We are committed to operating as a business with purpose, where maximizing profitability and sustainability go hand in hand." Specifically, it brings up Madewell's denim recycling program, incorporation of sustainable and recycled fabrics, charitable partnerships and the fair trade denim capsule it launched earlier this year. It boasts that over 600,000 pairs of jeans have been recycled, creating over 1 million square feet of housing insulation.

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It's difficult to imagine either of these points making it into an apparel retailer's prospectus even a few years ago. No investor would have expected it. But clearly, sustainability is becoming a bigger priority — both for consumers and maybe even for investors. And while there may be the rogue investor who does care about the impact their holdings make on the planet, this shift likely has more to do with the fact that there is proof that sustainable practices and sales growth can now go hand-in-hand, and that consumers are increasingly showing interest in sustainably-minded companies.

Another example is Reformation: When it was acquired earlier this year by Permira Funds, the private equity fund mentioned sustainability as one of the main factors that made Reformation an attractive asset. Other sustainability-focused brands that have attracted significant investor money in recent years are Allbirds, which was valued at $1.4 billion after just two years, and Rothy's, another sustainable shoe brand, which raised $35 million from Goldman Sachs last December. 

As traditional fashion businesses flounder (cough, J.Crew, cough), it's non-traditional, innovative formats that investors are looking for. Madewell's omnichannel success and social media engagement are also touted throughout the prospectus. 

Madewell's progress in sustainability and inclusivity, on the other hand, is fairly recent — and, one might argue, was ramped up strategically in anticipation of this IPO. But regardless, it's progress every fashion brand should be making. And now that sustainability, at least, is at top of mind for investors across industries, hopefully more of them will.

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