J. Crew to Unveil New Brand for Younger Women in Recovery Plan

(Bloomberg) -- J. Crew Group will unveil a new brand to appeal to a younger, female shopper as the preppy clothing retailer seeks a broader audience for its recovery strategy.

“We see ourselves as having more than two brands. In fact, we’ll be announcing one new brand this year,” Chief Executive Officer Jim Brett said in a Bloomberg TV interview. “It is aimed at women, and it’s younger than any of our existing brands.” He declined to provide further details.

J. Crew is trying to bounce back from years of lackluster sales. It’s in the midst of a relaunch of its eponymous brand to focus on diversity by offering more size options. The other brand, Madewell, has become a bright spot for the company -- appealing to millennial women by embracing more of a tomboy style with its denim clothing and accessories.

J. Crew to Unveil New Brand for Younger Women in Recovery Plan

The retailer has posted positive comparable sales -- a closely watched measure -- for two straight quarters, after years of declines, thanks to strength at Madewell. The company has been working to recover from a drop in brick-and-mortar traffic that has been plaguing the industry broadly as consumers increasingly shop online. It’s also laboring under a debt load from a leveraged buyout by TPG and Leonard Green & Partners LP in 2011.

Distinguishing Brands

Brett, who took the helm at J. Crew last year, said the relaunch is showing results. There’s an increase in new shoppers and a return of customers who had left, as J. Crew emphasized inclusiveness through a wider range of sizes and more entry-level prices. The company is also making an effort to keep its Madewell and J. Crew brands unique.

“It’s very important to maintain distinction between the brands,” Brett said. “It wouldn’t do the portfolio any good to cannibalize itself.”

J. Crew has also partnered with Amazon.com Inc. to offer clothing on the Amazon Fashion platform, and has broadened its reach by selling through Nordstrom Inc. Brett said the wholesale approach offers a “huge global opportunity,” citing expansion in Europe and South America. He said J. Crew is also exploring opportunities in Asia.

The retailer’s turnaround strategy will face headwinds from the trade war between Beijing and the Trump administration. Despite the U.S. slapping a 10 percent tariff on purses and other Chinese goods that took effect Monday, J. Crew doesn’t expect to raise prices.

“We have to figure out a way to manage our internal costs to absorb it,” said Brett. “Part of our products, our accessories, our handbags are impacted by the recent tariff. But, you know, it’s our job to make sure we have a highly diversified sourcing strategy."

Less than one-third of J. Crew’s products are sourced from China, he said. When asked if they may reduce that exposure, he said the retailer is always looking at ways to strengthen its position and so “will probably become more aggressive on that front.”

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