J.Crew is being outshined by its cooler sister
- J.Crew is being superseded by its sister brand.
- In its fourth-quarter results, reported Tuesday, J.Crew said that same-store sales at its store dropped 7%, while sales at its sister brand Madewell soared 17%.
- J.Crew wants to cash in on its success and has launched Madewell shop-in-shops in six locations.
J.Crew is being superseded by its sister brand.
In its most recent results, reported after markets closed on Tuesday, J.Crew announced a 7% slump in same-store sales during the fourth quarter and confirmed it would be closing 20 more stores in 2018. Meanwhile, sales at its trendy sister store, Madewell, surged to record heights with a 17% increase.
This massive discrepancy in same-store sales growth isn't an anomaly. It's a trend - 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. At Madewell, same-store sales grew by 5% in 2016 and increased by 10%, 11%, and 13% in the first three quarters of 2017.
As customers leave J.Crew, citing poor quality and expensive prices, they're flocking to Madewell.
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 have a lower price point than at J.Crew.
J.Crew has started to take a page out of Madewell's book and has lowered its prices to make it more accessible.
Former J.Crew CEO Mickey Drexler said that price increases were what initially spurred the brand'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."
But J.Crew isn't only trying to mimic Madewell's success - it's also bringing its products to stores. In February, the retailer said it would bring Madewell shop-in-shops to six of its stores in New York, Florida, Iowa, New Hampshire, and Connecticut, Retail Dive reported.
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. Drexler set his mind to make it huge and put Somsack Sikhounmuong, who started out at J.Crew 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.