The mega fashion retailer J.Crew Group recently announced that the company will close 50 stores by the end of January.
According to the company, sales have drastically declined, and they will have to close many stores. Originally intending to close only 30, the company since adjusted their statement, adding twenty stores for closure.
United Press International reports:
Mike Nicholson, the chief operating officer, said store closings are part of plans to change from a “traditional brick-and-mortar specialty retailer” to a “digital-first” business.
J.Crew lost $161 million and total revenues decreased 4 percent to $1.66 billion through three quarters. One year ago at the same time, it lost $24.6 million.
Sales at stores open for at least a year fell 12 percent in the first nine months of the year, compared with a 9-percent decrease through the same point last year.
However, Madewell sales increased 20 percent to $285.2 million through nine month. In 2006, the company introduced Madewell, a modern-day interpretation of an American denim label founded in 1937.
“Our goal is to reinvigorate the J.Crew Brand to reflect the America of today and to continue to drive strong momentum in the Madewell Brand,” Chief Executive Officer Jim Brett said.
Brett took Mickey Drexler’s place as CEO this summer.
Drexler admitted that the company made a huge mistake by marketing their businesses as high-brow at a time when people were looking for lower priced goods.
United Press International continues:
“We gave a perception of being a higher-priced company than we were – in our catalog, online, and in our general presentation,” Drexler told The Wall Street Journal. “Very big mistake” […]
J.Crew is among several retailers shrinking their brick-and-mortar operations.
A total of 6,765 stores in the United States had closed through the end of October, according to Fung Global Retail & Technology, a retail think tank. That is a 235 percent increase from last year.
The think tank forecasts there will be a record 9,452 announced store closings by the end of this year, exceeding the previous record of 6,164 closing in 2008.
According to Bloomberg, the future of J Crew and several other brick-and-mortar retailers such as Bon-Ton greatly depends on Christmas season profits.
Department stores across the country are struggling to survive as Walmart dominates the store market and more and more shoppers are buying their goods online, particularly from Amazon.
More retailers are at risk of running out of cash or defaulting on debt now than at the peak of the last recession, according to Moody’s Investors Service, and subpar holiday sales could deepen their distress. To be sure, wide-open credit markets have kept a lot of overleveraged retailers chugging along with even more borrowed money. But time is running out for several well-known names at the local mall, some of which may not be around next holiday season — at least not in their present form or in the hands of their current owners […]
On top of its debt drama, the clothing company [J.Crew Group] lost both its creative director Jenna Lyons and her replacement, lead designer Somsack Sikhounmuong, within months. New CEO James Brett took the reins from long-time leader Mickey Drexler in July, and is trying to turn around the decline in revenue and comparable-store sales at the label. The company skipped New York Fashion Week in September for the first time in six years.
J. Crew posted its latest quarterly results on Tuesday. And while there are signs of promise at its Madewell brand, the company’s flagship chain continues to sputter. J. Crew’s same-store sales fell 12 percent in the period, compared with a 9 percent drop a year earlier.
According to Bloomberg, Sears, Nine West, Claire’s, Charming Charlie, Bon-Ton, and J Crew are all “riding on holiday sales” this year.
If sales don’t improve soon, the massive increase in closures we’ve been seeing lately could be just the beginning.
Are these major retailers facing a terminal decline?
Let us know what you think, and sound off in the comments below.