Is Bankruptcy Looming for J.Crew?

J. Crew’s Financials Aren’t Good

A Reuters article, dated 11/16/16 is speculating that J.Crew is considering a spin-off of their successful Madewell division, in a likely attempt to raise cash. According to the 3rd quarter 2016 results, J.Crew stores had a 7% sales decline and including Madewell, had roughly $1.5 billion in debt and just $38 million in cash. This is not a healthy place to be.

What happened to one of the best specialty retailers in America? It’s easy to blame mall traffic, but those shoppers are shopping elsewhere and online. By the way, J.Crew has had an exceptional e-commerce site for many years.

They got caught in a maelstrom of changing trends and self-inflicted wounds.

The 4 Biggest Reasons J.Crew is Struggling

Millennial shoppers are the most strapped generation in decades. This largest demographic in the history of the US, is now 16-33. They are the most diverse American generation ever, with a wide range of tastes. Their shallow pockets have given rise to fast-fashion, consignment, rental and vintage apparel sales. I don’t think they aren’t interested in fashion, but clothing is discretionary after rent, school debt, healthcare, transportation and food costs. 

J. Crew had been dogged by inconsistent quality and styling.

J. Crew had been dogged by inconsistent quality and styling.

J.Crew seemed to target this growing base with lower quality materials in an attempt to decrease or hold prices. They also dabbled in trendier silhouettes, adding to the brand confusion. In the classic business you walk a fine line, to offer the expected, with a touch of newness to excite the customer.

Seemingly, in an attempt to be all things to all customers, they alienated fans that saw them as the quality, hip “American” lifestyle brand in the mall. They should have embraced their monopoly as a reliable, premium brand and let the rest of the generic tenants duke it out.

J.Crew had what they thought was a winning formula, cotton/spandex Capri pants, cashmere sweaters and cotton tees. They rested on formulaic laurels while customers were discovering more comfortable, durable and flattering fabrics in athletic apparel from the likes of Lululemon and many others. The rapid adoption of athleisure was lost on J.Crew. They didn’t see that customers were embracing a new casual. They should have evolved some of their assortment to address the exodus, in new fabrications or styling with a J.Crew spin. They just launched, in fall 2016, a “brand-right” athletic apparel collaboration with New Balance, maybe too little, too late. The athletic apparel market has much less elbow room at this point.

There are new kids on the block. At one time, J.Crew was the epitome of the modern prepster. They blended an urbane twist with classic American looks, to define an eclectic, cool state of prep. This wearable market position had a wide audience with fashion and traditional customers.

This late summer 2016 product is what they are know for, classic with a twist.

This late summer 2016 product is what they are known for, classic with a twist.

In recent years, they veered off course with poor quality or trendy items, overly eclectic pairings and strange colors, a road too far for their loyal customer.

As J.Crew confused its customer, they created a vacuum for other rapidly growing, consistent brands to fill. Kate Spade has taken away legions of suburban and urban women of all ages with their whimsical, colorful vibe. Vineyard Vines offers the traditional country club and aspiring wanna-bees,  preppy classics, that really resonate with Millennials. J. McLaughlin attracts the hard-core suburban prepster with uber-traditional, quality clothes. Tory Burch skims off the East Side, preppy customer. Club Monaco speaks to the contemporary, classic customer. These five brands are growing and nibbling at J.Crew’s forgotten following. The pie is only so big and their slice is getting smaller.

There continues to be significant markdowns across categories.

There continues to be significant markdowns across categories.

The stores need a facelift. The above brands have bright, organized new store formats. J.Crew’s shops are cluttered, chaotic and dark and the wood paneling feels very Brooks Brother’s 1992. They don’t highlight their best categories in a focused, shoppable layout. The brand experience needs a serious intervention, a difficult task, with mountains of debt.

None of these opinions are probably news to J.Crew. This is a formidable company with tremendous talent. Maybe they became too insular or content?

This product is a bright spot in the Fall 2016 assortment.

This product is a bright spot in the Fall 2016 assortment.

Amidst the clutter this fall, I’ve seen glimpses of the best of J.Crew. Time will tell, if it’s enough to save them from a painful bankruptcy. It’s not looking good based on 3rd quarter results.

Most retailers never achieve the iconic consumer and fashion industry respect of J.Crew. I’m rooting for them to turn this ship around.

 

Some other posts you might enjoy:

Decoding Millennial Shopping Traits & Habits

Are Sporting Goods & Outdoor in a Death Spiral?

7 Common Fashion Brand Management Mistakes

 

The Dix & Pond Blog, by Stephanie Bernier is the blog of  Dix & Pond Consulting, a Boston-based, company that consults on business strategy, creative direction, brand experience, trends, product development and merchandising. Clients include retailers, apparel, footwear & consumer companies.  CONTACT US TODAY! 

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Sweet Things – Fall Fashion Power Trend

The pleasure of fashion is the ability to transport the wearer and captivate the observer. Fashion is a game, played well, by a scarce few who understand its incredible power.  Fashion choices can help one transcend mere mortal status. Think of the ability of black leather to dominate, a Navy uniform to officiate or all white to glamorize.

Nothing is so sensual, so alluring, so downright sexy as the “Sweet Things” trending in fall fashion. These girly, fitted, ruffly, lacy, pleated, cropped, sheer, sequined and embellished items have the ability to bring men to their knees.  Women get caught in their emotional web and can’t resist the impulse. Think legal nudity.

Power trend: Sweet and sexy blush items for fall.

Power trend: Sweet and sexy blush items for fall.

Most often, these trouble-making tops, dresses, handbags, shoes, sweaters, active wear, bras, panties and skirts are in delicate shades of blush pink.  Look for these delicate colors in beauty lines, as well.

Caution, there can be too much of a good thing. Wear them tonally or in single servings. Pair sweet pieces with edgier ones like jeans or leather jacket. Pair with grey, navy or maroon. Head-to-toe blush pink can lead to a matronly sugar rush.

Look to Herve Lerger, Ted Baker, Tory Burch, Club Monaco, BCBG, Zara, La Perla, Athleta, etc. for some of the best Sweet Things.

 

For color seasonal color forecasts, see COLORSCOOP.

 Dix&Pond is the blog of Dix & Pond Consulting Creative and strategic consulting for retail, wholesale apparel, footwear, consumer products and branding agencies. Follow me to get the latest posts

Women’s 5 Fall 2014 Fashion Essentials

Stylish women seem effortlessly modern and have a certain je ne sais quoi. What’s the secret? They understand that a great wardrobe is a continuous evolution not a revolution. The fashion-savvy build upon their curated closet seasonally, with a handful of new items that have the power to change everything. Here is my round-up of five essential, trend-right items for Fall 2014, that will simply give you an up-to-the minute look:

Fall 2014 Fashion Must-Haves

Fall 2014 Fashion Must-Haves

1.  The slip-on sneaker. Sneaker style is white-hot. The not-so-humble “slip-on” in modern materials, such as metallics, leather, quilted, perforated, printed or embroidered, has my vote for the casual shoe of the season. Pair them with jeans, skirts, dresses, athletic pants, just about everything, for a comfy update to your fall footwear wardrobe. Think Vans, Steve Madden, Dolce Vita, Tory Burch, Michael Kors, Joie, Vince, Prada, Stella McCartney, Jimmy Choo and just about all the usual suspects.

2. The clutch bag. There is something so elegant, so fresh , “clutching” a bag when everyone else is schlepping a sack over their shoulder. The clutch is a sure glam-slam.

Clutch bags come in envelope or clasp styles or and the more user-friendly wristlet clutch; either way it is an instant fall 2014 style update. I particularly like them in a pop of color, textural metallic or animal print, paired with neutral clothing. Check out Valentino, Alexander Wang, Marni, Proenza Schouler, Smythson, Tory Burch, Michael Kors, Ted Baker, Kate Spade, BCBG and many more.

3. The athletic jean. Jeans are down-trending as women are wearing athletic or “athleisure” looks in and out of the gym. The trend has gone beyond basic yoga pants to spandex blend and nylon pants in 5-pocket jean-styling, cuffed sweats, boyfriend shapes, cargo details, etc.

Pair fitted pants with an oversized sweater, layered tops or sexy top for the gym. Pair baggy sweats, boyfriends or cargos with smaller, close to the body tops. See some of the best at Athleta, Carbon 38, and Net-a-Sporter.

4. The graphic top. “If you see something, say something”. The lowly graphic tee or top has been elevated to fashion status this season. Words have the power to express something about the wearer, simply amuse, suggest or confuse the audience. Text is powerful and playful, a small investment for an instant seasonal update. Look for intarsia sweaters and printed sweats and tees from Madewell, J Crew, Zara, Pam and Gela, Haute Hippie, Free People, Current/Elliott, Alexander McQueen, etc.

5. New outerwear. Outerwear is daily wear and more people see us with our coats on than off. An investment in an updated trench, parka or jacket can change-up your current wardrobe and attitude in an instant.

Look for down-filled, shine, quilted, luxe leathers, pop colors and metallics in puffers, 3/4 styles and cropped moto jackets. I particularly like casual styling in upscale materials. My favorites include Moncler, Burberry, Barbour, SAM., Mackage, Via Spiga and Uniglo.

Dix&Pond is the blog of Dix & Pond Consulting Creative and strategic consulting for retail, wholesale apparel, footwear, consumer products and branding agencies. Follow me to get the latest posts

 

Well Shod- Fall 2012 Shoe Trends

Shoes and bags have been on a retail tear lately. The excitement in footwear and handbag design is palpable. As designers have taken style risks in colors, shapes and materials, consumers have rewarded them with ever-increasing sales. The Saks 5th Avenue flagship which has one of the most extensive and exciting designer shoe floors on the planet is expanding once again. Macy’s Herald Square is creating the largest shoe floor in the world at 39,000 square feet. There is a highly innovative period happening in athletic, casual, dress shoes and boots. In the shoe biz, the ante is up and it’s no time to bluff.

Fall 2012 Shoe Trends

Fall 2012 Shoe Trends

Shoes and handbags like the beauty area, are inclusionary of all sizes and ages, so all customers can play in the game. Plus-sized customers have under-sized apparel options so they turn to the democratic shoe floor for a fashion update. With shoes (with a few extreme exceptions), the forgotten male or female boomer can send a major fashion smoke signal, without looking like a desperate fool.

Women covet shoes and will reach beyond their means for status brands like Prada, Miu Miu, Valentino, Tory Burch, Brian Atwood and Christian Louboutin. They are also stuffing their closets with Uggs, Sperry, Kate Spade, Coach, Michael Kors, Nike, Converse, Hunter, BCBG, Stuart Weitzman, Cole Haan, Ivanka Trump, Tom’s and Isaac Mizrahi to name a few.

Here’s a run down on the best Fall 2012 trends:

Color and Patterns – Colors and patterns such as animal prints, are major drivers of newness in all categories of shoes

Lighter Than Air – Ultralight and colorful running and athletic shoes from Nike, Asics, New Balance Minimus, etc.

Retro Vulcanized – Retro sneakers are hot in new materials and colors from Superga, Uggs, Converse and other designers.

Glam Casuals – Casual has gone glamorous in boat shoes, slippers, boots, loafers and sneakers with glam styling such as metallic, sequins and glitter

Tough Love – Biker details such as buckles, straps and multi-studs on boots, sandals and smoking slippers

Oxford Grad – Classic and inventive oxfords continue in contrast colors and materials (Valentino even has lace tipped patent leather oxfords!)

Tipping Point – Ultra high ice pick heels and pointy toed pumps

Feminine Flats – The world is flat.. especially hot are smoking slippers in a wide variety of materials

Dix&Pond is the blog of Dix&Pond…creative and strategic consulting for retail and wholesale apparel, shoe and consumer products.

She doesn’t have to have it….

For the past several years women’s apparel sales have been lackluster. Handbags and shoes have taken the spotlight and continued to outperform while apparel languishes. The excitement in shoe and bag design is palpable. Designers have continued to up-the-ante in footwear and bags, in bold colors, fresh materials and pushed the limits on new shapes. Confidence has spurred a creative explosion in these categories. This has added up to multiple seasons of big personality accessories winning hearts and wallets, in a down cycle of consumer sentiment.

Women’s apparel is another story. Here are several reasons for the depressed fashion phenomenon.

There is a lack of creative risk taking in apparel by wholesalers and retail merchants; call it retail sameness, fear of failure, wholesale and retail firms have a bad case of stage fright. They’re driving with eyes in the rear view mirror and trading down on quality. Many look to the past for the future and figure the safe road is the way to hunker down. Recessionary assortments of apparel are a counter intuitive bland diet for a customer with no appetite. Consumers have to be stopped in their tracks and wined and dined with fresh novelty and must-have styling.

There is a dearth of contemporary brands for the wealthiest segment of the market. Boomers+ have the money, but there is a lack of fashion forward casual brands suitable for the aging customer. This segment must choose between dowdy mature offerings or “do I look foolish” in this uber-short contemporary dress? Consequently, they turn to forward accessories to look current without looking like a sorry soul. This is an opportunity to reach a big underserved market.

Size matters. There is a lack of larger sizes for an “expanding” population of all ages. Women bigger than a size 12 or 14 can’t find much in most specialty or in mainstream areas of department stores. A huge part of the population is literally ignored. Larger women have to turn to the democratic accessory and beauty departments for a fashion update.

It is frustrating to shop for apparel in traditional store formats. Most women today are strapped for time, have short attention spans and an overwhelming sea of options. It is difficult to shop for an item, when most department and specialty stores are organized by collection.  If she needs a white top, she is forced to shop a whole store or department to find the item. A harried consumer will bypass department stores for the ease of shopping a simpler format with item depth, like J. Crew. Handbags, shoes, cosmetics, jeans and lingerie tend to outperform other areas. These departments are classifications, not collections and easier to shop. Part of the rapid growth of online shopping is that it simplifies the process. It quickly nets the offer to classifications.

The best accessories come from wholesale branded companies like Prada, Kate Spade, Tory Burch, Longchamp, Coach, Michael Kors, to name a few. Bags and shoes are two areas where there is little private label. Consumers are validated by brand authenticity and the inherent status of branded accessories. For the most part, private label apparel is subject to large committees of leadership, who all put their stamp on the offer. Subsequently, they can water down the soup.

Accessories are the easiest way to update last year’s wardrobe. Apparel like accessories, is an emotional buy. It is unfortunate that most traffic doesn’t covert to a sale, only a disappointed customer. Compelling merchandise is the key way to improve conversions. If wholesaler and retailers continue to offer vanilla assortments, the consumer will continue to spend her disposable income on the latest accessories and technology.

 The following pictures are “best-foot-forward” displays from some major retailers. Their brand identities are indistinguishable. Do you think “she’s gotta have” this merchandise?

Dix&Pond is the blog of Dix&Pond consulting…strategic and creative product development and brand consulting.

Another Approach for Ann Taylor?

Designing a line of clothing is like putting on a Broadway play every season. Sometimes the new one is better than last season’s, sometimes not. It is nearly impossible to have a continuous upward graph when creating a new product line in the notoriously fickle fashion field. The Recession of the past several years, has put retailers on the defensive and exacerbated the issues.

Ann Taylor window, March 2012.

Ann Taylor window, March 2012.

Ann Inc. just reported fiscal 2011 results. The larger Loft division reported a 10.5% increase in total comps (including all channels), with an 8.1% in store comps for the year. In contrast, Ann Taylor had a 1.1% total comp increase, with a 10.9% decrease in store comps. CEO, Kay Krill is promising improvements at Ann Taylor…”among the number of changes underway, we are evolving the assortment in-store to offer her a better balance within each category, including more color choices, greater versatility and more depth in key fashion items and marketing looks. In addition, we will be offering more depth and breadth in opening price points in virtually every category to provide her with even greater value.”

I have soft spot for Ann Taylor. In my early career, the brand defined upscale fashion for ladder-climbing women. I was an ardent fan. In my heart, I still want them to succeed. As a designer, industry insider and former alpha-customer, the myriad problems are obvious to me.

In my opinion, they responded to the Recession with sparse inventory, lower quality fabrics and abdicated core basics. Colors have been hit or miss, at times exciting and occasionally, thoughtlessly unwearable.

The big advantage of specialty retail and e-Commerce is that these channels are easier to shop than department stores. Busy women don’t have time to search the collection-based apparel assortments of department stores to find a basic tee, a pair of black pants or a great white shirt. Interestingly, the best performing areas in department stores are sold in categories, handbags, shoes, jeans, cosmetics, dresses, etc. The problem is specialty retailers keep trying to offer collections vs. understanding shopping simplicity is one of their core advantages.

Ann Taylor used to be reliable for a decent assortment of well-made, consistently fitting casual and dressier pants. They also were a great place  for terrific white shirts from basic to highly styled. Who could tell they weren’t from Theory? You could count on deep inventory in quality tees for the season; who needed J Crew? Shoes became boring and generic, the day they parted ways with Joan & David.

Ann Taylor should be a contrast to Loft, with better quality, more sophisticated products. Loft is doing well, but why try to compete head on? As a former Ann Taylor fan, the Loft quality never did it for me. Ann Taylor today could be any one of a number of faceless specialty chains. Some thoughts for improvement:

Offer a better value to the customer thorough improved fabrications, not lowered prices. Ensure depth in the core replacement basics needed every season. What about a permanent white shirt area like an Anne Fontaine? How about a basic pant area that carried the core styles of the season? Create a section for tees, where white would NEVER be out of stock. Add more compelling bags and shoes that are less concerned with price and more focused on fashion and quality. How about some traffic-building accessory brand names such as Brahmin, Tory Burch, Longchamp or Kate Spade?

It is time to take a counterintuitive, novel approach to change the fortunes at Ann Taylor.

Dix and Pond is the blog of dix& pond consulting

Low inventory levels are obvious at Ann Taylor.

Low inventory levels are obvious at Ann Taylor.

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