J. Crew Reports Sales Accelerated in Departed CEO’s Last Quarter
(Bloomberg) -- J. Crew Group Inc.’s turnaround orchestrated by its recently ousted chief executive officer appears to have staying power, with the retailer reporting its third straight comparable sales gain after years of declines.
- The apparel company’s total comparable-store sales rose 8 percent, the biggest gain in more than five years.
- The results cap James Brett’s last quarter leading the retailer and show his moves put the company back on track. He departed suddenly as CEO this month shortly after relaunching J. Crew’s famously preppy namesake brand to offer more size options and entry-level prices.
- J.Crew, in its earnings call, addressed Brett’s abrupt departure. “Jim and the board did not share the same vision for how best to take J. Crew forward and, on that basis, mutually decided to part ways,” said Michael Nicholson, chief operating officer and one of the four executives in the company’s office of the CEO.
- Some of Brett’s changes may be unwound. J. Crew will phase-out its budget clothing line Mercantile, shut down its Nevereven brand and exit the J.Crew Home business, according to an internal memo obtained by Bloomberg News.
- The company will focus on its growing Factory business instead, and plans to hire a ‘head of Factory’ to focus on that area.
- J. Crew’s more casual Madewell line has been more successful than its larger namesake brand, and that proved to be true again this quarter. Madewell’s comparable sales spiked 22 percent in the quarter, but even its slower growing J. Crew brand saw 4 percent growth.
- The company, in its earnings call Thursday, said it plans to close 30 stores this year, while opening 9 Madewell stores and one J.Crew location.
- On the call, the company said gross margins declined due to the higher cost of shipping to fulfill e-commerce orders and more promotions.
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