The crews appearing in the glossy pages of J. Crew catalogs 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 nearly 520
retail and factory stores across the US under the J. Crew, and
Madewell banners. Madewell is a women's-only collection of hip,
casual clothes. Outside of the US, the retailer also boasts 32
stores in Canada, London, Hong Kong, and Paris. The American
retailer sourced about 98% of its merchandise from factories
outside of the US in fiscal 2016 (ended January 30); 65% of which
were sourced from China and Hong Kong.
J. Crew Factory stores are located primarily in large
outlet malls and sell a specific line of merchandise tailored after
products sold in the previous season at J. Crew retail stores and
online. About 53% of the retailer's total sales came from women's
apparel sales in fiscal 2016, while Men's and Children's apparel
sales generated 24% and 7% of total sales, respectively.
Accessories brought in the remainder of the retailer's total
The company's fast-growing Madewell line offers women's apparel,
including a new line of suits, that is priced 20% to 30% lower than
J. Crew merchandise. As at August 2016, the company operated 287 J.
Crew retail stores, 108 Madewell stores, and 170 factory stores,
mostly in the US.
New York-based J. Crew boasts nearly 520 stores in 44 US states
and the District of Columbia, with nearly half of its stores
located across the states of California, New York, Florida, Texas,
Massachusetts, New Jersey, and Pennsylvania. The US market accounts
for essentially all of the retailer's sales.
Beyond the US, it operates two stores in Paris; 19 stores in three
Canadian provinces: Alberta, British Columbia, and Ontario; seven
stores in London; and three stores in Hong Kong. J. Crew's
e-commerce site is active in 100 countries.
Sales and Marketing
The retailer relies on the J. Crew catalog as the primary
vehicle for marketing and advertising. The catalog, which drives
in-store as well as direct sales, utilizes high-quality photography
and art direction, to burnish the J. Crew brand. The company spent
$48.5 million on catalog advertising in fiscal 2016, compared to
$47.4 million and $51.6 million in fiscal 2015 and 2014,
Beyond the book, the company relies on online, print, and outdoor
advertising. The retailer also offers a private-label credit card
that accounts for about 15% of its total net sales. The chain's
customers are affluent, college-educated, professional and
style-conscious women and men. All told, J.Crew spent $71.1 million
on advertising costs in fiscal 2016, up from $63.3 million and
$51.5 million in fiscal 2015 and 2014, respectively
The retailer sources its products either through buying agents or
by purchasing merchandise directly from trading companies and
manufacturers within the US and overseas.
J. Crew credits its on-target fashion sense and lean inventories
for its strong sales growth in recent years. However, the company's
net revenues decreased in fiscal 2016 by 3% to $2.51 billion due to
a decrease in revenues from the J.Crew segment.
The revenue from J.Crew segment declined by 6%, primarily driven by
a decrease in sales of J.Crew women's apparel, specifically knits,
sweaters, and shorts.
In fiscal 2016, the company's net loss increased by 89% to $1.24
billion due to lower net revenues and higher impairment losses,
related to the write down value of goodwill, intangible assets, and
certain long-lived assets.
Operating cash inflow decreased by 14% to $135.55 million.
J. Crew has been aggressively expanding its store network across
the US, adding 53 new retail, factory, and Madwell stores in fiscal
2015 after opening 50 locations during the prior year. Indeed, from
2012 through 2014, the retailer grew its total store base by 25%,
from 401 to 504 stores. As part of this expansion, J. Crew has been
introducing more of its Madewell and factory stores for
price-sensitive shoppers as consumers have become more thrifty in
In an attempt to boost sales, J. Crew has also been expanding its
direct and retail store businesses internationally. The chain
opened its first two J. Crew stores in Paris in 2015 after opening
stores in Hamilton Place and London in 2014 and 2013, respectively,
and is looking to expand to other countries in Europe and Asia.