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J. Crew Group (JCG)Stock (Apparel Stores Industry, Retail Industry, Fashion Industry)
 J.Crew sells men's, women's and children's apparel and accessories through a chain of company owned retail stores located throughout North America. The company markets a classic 'preppy' style similar to retailers like Polo Ralph Lauren (RL) and Banana Republic. In addition to the company's retail and factory stores, J. Crew reaches customers through direct sales (J.Crew Website and Catalog). It had total revenues of $1.15B in 2007[1]. J.Crew has experienced a remarkable turnaround since 2003. Numerous problems of the past included marketing missteps, a weaker brand image, an inefficient supply chain, and mounting debt, all contributing to the firm's underperformance. Under the leadership of Millard Drexler, the company has improved performance through a combination of cost cuts and improved merchandising. The company's successful IPO in June of 2006 also allowed it to reduce its then substantial debt load. Since 2003, the company's revenues have increased by 50%, and its operating margins have gone from -5% to 11%.[2]. Moreover, with only 280 retail stores and outlet locations in the United States (as of Q1 FY08)[3] and virtually no presence outside of North America, the company has plenty of room for both domestic and international growth. However the companies concentration within the U.S. means that J. Crew is extremely dependent on the health of the U.S. economy, which faltered in the second half of 2007 and the beginning of 2008. However, despite falling consumer confidence and cutbacks on discretionary spending, J. Crew has performed strongly in 2008, as revenues increased 12% in the first half, with comparable store sales rising 1%.[4]
[edit] HistoryOriginally launched in 1983 as a catalog based retailer of men's, women's and children's apparel and accessories, J.Crew evolved into a store based retailer with the launch of its first store on South Street Seaport in New York City in 1989. Known for its 'preppy' look, J.Crew appeals to the same classic traditions of Polo Ralph Lauren (RL), Banana Republic and Brooks Brothers. With recent expansions, J.Crew has diversified its portfolio by launching an online Wedding & Special occasions shop, a high end collection for select stores, and a children's line labeled CrewCuts. J.Crew went public with the third largest retail IPO in history on June 28, 2006 and has witnessed significant growth in its stock price, revenues, and margins. [edit] Business OutlineJ.Crew conducts its business through two primary channels: Stores (including retail and factory outlets) and Direct (including the J.Crew catalog and website). J. Crew's main products are Men's, Women's and Children's (recently introduced) Apparel and Accessories. The graphs below shows the break down of J. Crew's $1.15 billion of revenues in 2007.[5] 
[edit] Stores In fiscal 2007, 68.5% of total revenue ($914 million) came from sales at stores, split between retail locations and factory ("outlet") stores. Retail As of the end of Q2 FY08, J. Crew operates 212 retail stores, including 4 Crewcut and 10 Madewell stores in the U.S. J. Crew stores are generally located in upscale malls, shopping centers, and street locations. Within retail locations, J. Crew drives its staff to perform by handing out bonuses in proportion to individual sales.
 [edit] DirectJ. Crew conducts its direct sales through the J. Crew website and the J. Crew catalog. J.Crew has two distribution centers in the U.S., one in Lynchburg, VA (this facility doubles as a call center for the whole U.S.), and the other in Asheville, NC. Catalog The J. Crew catalog serves as J. Crew's primary marketing tool for the J. Crew brand. In 2007 J. Crew distributed approximately 48.6 million copies of its 23 different catalog editions. The revenues derived through catalog sales totaled $84.1 million[6] in 2007. This number does not fully reflect the value of J. Crew's catalog distribution as the catalog often encourages internet purchasing, in 2007 over 30% of Internet customers reported they had used a catalog before their Internet purchase. Online J. Crew launched its website in 1996. In 2007 the website logged 95 million visits up from 71 million in 2006. This added traffic helped sales from the website increase 34% to $293.3 million in 2007[7]. Over this period, the online sales grew from 71% to 78% of direct sales.
Note: 1. A figure in () for comparable store sales growth denotes a negative statistic; i.e. negative growth. 2. Revenues from store and direct sales do not sum to equal total revenue because of "other" revenue. [edit] Trends and Forces[edit] J. Crew Depends Heavily on Mall Traffic For SalesMost J. Crew stores are located in shopping malls. Sales in these stores depend heavily upon the success of the mall in drawing customers in large numbers. If mall traffic is adversely effected as the modes of purchasing change, J. Crew could find itself mounting losses with an excess of inventory and high real estate costs. [edit] J.Crew experiences Seasonal SalesJ.Crew experiences seasonal fluctuations in revenues with a large portion of its revenues coming in the fourth fiscal quarter (holiday season). In order to cater to this heightened demand in the retail segment , J.Crew stocks more merchandise the normal in anticipation of higher fourth quarter sales. An unanticipated decrease in demand for J.Crew products during this season would leave J.Crew flooded with excess inventory. [edit] Changing Fashion Tastes Effect J.CrewCompanies in the retail clothing industry are at the mercy of changes in fashion trends. Seasonal changes in tastes pose a constant challenge to designers as they attempt to predict new looks. This is particularly true of retailers like J.Crew that market a certain type of clothing. J.Crew markets itself as a 'preppy' brand. In recent years the shift towards the 'preppy' look has been beneficial to J.Crew's business. As tastes change, however, and the preppy look falls from grace the retailer may be forced to reinvent itself. [edit] Consumer Spending on Clothing and Lifestyle Products is Extremely Sensitive to Economic ConditionsConsumer spending on luxury goods such as J. Crew's products is discretionary in nature. In times of economic recession consumer's quickly decrease expenditure on luxury items. In 2007, both the real estate and credit markets were severely affected by the subprime lending crises. Consumers faced with an inability to draw on equity in their home to fund purchases and a tougher overall credit market were in many instances "forced" to spend less on clothing. Additionally, other economic factors like the price of oil which approached the $100 mark near the end of 2007, can further decrease disposable income available for discretionary purchases. Under such conditions, consumers to who do purchase clothing tend to skew their purchases toward lower end retailers. [edit] CompetitionJ. Crew operates in the highly competitive specialty retail industry competing against high-end department stores, catalog retailers, web based businesses, and other specialty retailers.
 J. Crew Group2004 Data 2005 Data 2006 Data 2007 Data 2008 Data Most Recent Data Available [edit] Footnotes
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