As customers leave J.Crew, citing poor quality and expensive prices, Madewell's sales are soaring.
Same-store sales have been down at J.Crew for the past three years, dropping by 8% in 2016 following a 10% decrease the year before. In its most recent earnings report, in the third quarter of 2017, sales had dropped by 12%. The company has not yet released its fourth-quarter results.
Meanwhile, Madewell's same-store sales grew by 5% in 2016 and increased by 10%, 11% and 13% in the first three quarters of 2017.
The company is now rolling out Madewell products in some of its J.Crew stores in an effort to revitalize sales, Racked reported Friday. J.Crew did not immediately respond to Business Insider's request for comment on the arrangement.
Madewell has been around since 1937. It was founded in New England by Russian immigrant Julius Kivowitz, who originally sold bib overalls, jeans, and dungarees for factory workers and fishermen.
It was acquired by J.Crew in 2006 under the direction of former CEO Mickey Drexler. Drexler set his mind to make it huge and put Somsack Sikhounmuong, who started out at J.Crew, in charge of design in 2013.
"We are cleaning and simplifying, so we're steering the collection towards the classic, straightforward, and effortlessly sexy design and taking the things Madewell has done best — tomboy pieces, denim, and leather — and giving them a bigger platform," Sikhounmuong told WhoWhatWear in 2013.
The secret to Madewell's success has been knowing its customer and not jumping on fast-fashion trends. Its focus is on good-quality, longer-lasting clothing, which historically had a lower price point than at J.Crew.
Drexler said that increasing prices contributed to J.Crew's downfall.
"We gave a perception of being a higher-priced company than we were — in our catalog, online, and in our general presentation," Drexler told the Wall Street Journal in May 2017. "Very big mistake."