J Crew brand’s turnaround “working”, bright little sister Madewell set to grow “rapidly”
The tail continues to wag the dog at J Crew Group. The retailer’s much smaller but ever-successful Madewell brand continued to shine in Q4 and the core signature J Crew brand continued its longstanding negative run.
But changes are afoot. J Crew brand’s fledging turnaround “is working” with its most important womenswear category seeing positive results, CEO Jim Brett said late Tuesday.
Also expect its Madewell brand to “scale more rapidly”, he added, without explaining exactly what that means for the brand.
But for now, J Crew brand sales continue to fall, down 4% to $547m in Q4 while comps dipped 7% matching a year ago’s decline.
By contrast, Madewell sales leapt 32% to $135.8 and comps jumped 17%, following an increase of 6% a year ago.
That meant group net sales for the final quarter to February 3 increased 2% to $710.6m as comp sales fell 3%, following a 5% dip a year ago.
Net income jumped to $36.6m compared to $1.1m a year ago, benefiting from an income tax gain of $64.8m.
Gross margin increased to 36.6% from 34.7% in the fourth quarter last year.
Brett said: ”While we are only at the very beginning of our evolution of the J Crew brand, meaningful change is happening and we are already seeing results in our most important business – women’s apparel – signaling that our strategy is working.
“With the right strategy and leadership in place, we are uniquely prepared to respond to the growing customer preference for a more personalized experience.”
He added: “We will scale Madewell more rapidly, building upon its proven and consistent record of growth, through strategic investments with highly profitable returns.”
For the year, total revenues fell 2% to $2.37bn and comps dipped 6%, following a 7% fall in the previous year. J Crew sales fell 8% to $1.85bn with comps down 10% following a decrease of 8% last year. Madewell sales increased 23% to $421m and comps rose 13% following an increase of 5% last year.