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J.Crew’s road to hell was paved with sequined blazers and swan floats. The road to recovery, yesterday’s earnings report suggests, is lined with denim.
That would be Madewell, J.Crew’s denim-centric offspring. It helped the company shrink net losses to $16.2 million and push revenue up 7% to $579 million in Q1. This counts as “meaningful progress” after five straight years in the red.
J.Crew hasn’t had a solid grip on its brand image, or its pricing strategy, in ages—and the brand’s sales dropped another 4% last quarter as a result.
Meanwhile, Madewell, introduced in 2011, has become the Kate Moss of a crowded market. Sales grew 15%, driven in part by a cocktail of new ventures (menswear, swim) alongside its core assortment (denim beloved by Instagram models and suburban moms alike).
Madewell, which is contemplating an IPO, can’t be J.Crew’s prodigal daughter forever. To cushion the blow of any future shakeup, J.Crew is taking steps: 1) Reshuffle top ranks, like installing a new head of women's design, Chris Benz. 2) Address customer complaints, like a noticeable decline in materials quality.