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J. Crew's Sales Plummet, Overshadowing Growth at Madewell Brand

The company has made progress cutting expenses and boosting margins and expects to close 50 stores this year.
J.Crew store | Source: J.Crew
By
  • Bloomberg

NEW YORK, United States — J. Crew Group Inc. posted another withering sales decline in the latest quarter, raising fresh concerns about the apparel chain as it heads into the crucial holiday season.

Same-store sales plummeted 12 percent at the New York-based company’s flagship brand in the third quarter. That overshadowed strong growth at its newer Madewell division, which has attracted millennial women with its offbeat styles.

J. Crew also expects to close 50 stores this year, up from a previous target of 30. It had 574 stores as of October 28.

The company has made progress cutting expenses and boosting margins, but the worsening sales picture brings a fresh headache to new chief executive James Brett. The veteran of Williams-Sonoma Inc. took the helm earlier this year after long-time leader Mickey Drexler stepped aside.

J. Crew has been struggling to reinvent itself after years of watching sales slide. And management upheaval has made it difficult to build momentum. In addition to the CEO change, the company announced the departure of lead designer Somsack Sikhounmuong in September. He had replaced longtime creative director Jenna Lyons, who stepped down in April, months before the scheduled December expiration of her contract.

Total same-store sales fell 9 percent last quarter, compared with a 8 percent decline a year earlier. The bright spot was Madewell, which saw growth of 13 percent. But it’s still not a big enough part of J. Crew’s business to pull the company out of its funk.

The net loss widened to $17.6 million in the period, which ended October 28, from a $7.9 million deficit a year ago.

By Lindsey Rupp; Editors: Nick Turner and Mark Schoifet.

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