The crews appearing in the polished catalogs of the J. Crew Group are far from motley. The retailer is known for its preppy fashions, including jeans, khakis, and other basic (but pricey) items sold to young professionals through its catalogs, websites, and more than 360 retail and factory stores in the US (and now Canada) under the J. Crew, crewcuts (for kids), and Madewell banners. Madewell is a women's-only collection of hip, casual clothes. CEO Millard "Mickey" Drexler, recruited from The Gap to revive J. Crew's ailing fortunes, has led a renaissance at the firm, capped by a public offering in 2006. In 2011, the company was taken private by TPG Capitaland Leonard Green & Partners.
The two private equity firms bought J. Crew in March in a deal valued at about $3.1 billion, including the assumption of $1.6 billion in debt. They retained Drexler, who owns about a 12% stake in the business. The buyout sparked numerous shareholder lawsuits, which were settled in September 2011 when investors, upset about the deal's mechanics, agreed to a $16 million settlement. Some investors accused Drexler of using the deal to enrich and entrench himself at their expense.
Shrugging off the recession, J. Crew has enjoyed steady and robust sales growth in recent years. Indeed, in fiscal 2012 (ends January) sales topped $1.85 billion, up from just about $1.2 billion five years ago (an increase of 50%). Over the same period the company added more than 100 stores and, with the exception of fiscal 2010 when same-store sales posted a negative comparison, the chain has enjoyed positive comparable stores comparisons each year. In its latest fiscal year retail store sales increased by about 7%, while online and catalog sales rose about 11%. While all of the retailer's stores are in North America, it does ship merchandise to Japan, and the UK.
To grow sales, J. Crew is focusing on expanding its direct and retail store businesses internationally. The chain recently opened its first stores in Canada and is eyeing markets in Asia and Europe for store growth.
The company credited its on-target fashion sense and lean inventories for its strong performance. (Of course, having the First Lady Michelle Obama sport its fashions probably didn't hurt either.) Sales also got a boost from the expansion of the Madewell and crewcuts formats (both launched in 2006). Madewell offers women's apparel, including a new line of suits, that is priced 20% to 30% lower than J. Crew merchandise at 30-plus stores.
More than two-thirds of J. Crew's sales come from its retail locations, which include about 95 factory stores. Internet sales are growing at the expense of catalog sales and currently account for more than 80% of the retailer's direct sales. Asian contractors produce more than 85% of the company's merchandise.