Total debt in fiscal 2016:
Total sales in fiscal 2016:
Executives departed in 2017:
Executive positions eliminated or transferred to existing staff in 2017:
Paying off a debt load that seems determined to stick around and reconnecting with the J. Crew consumer base in a tough apparel market.
It's been a difficult year for J. Crew — and a particularly hard spring. The departures started in April when Jenna Lyons, the brand's president and executive creative director since 2012, walked out the door and took the face of the brand with her.
If only that was where it ended.
Alas, Lyons' departure sparked a mass exodus in the top ranks of J. Crew's management. She was soon followed by head of menswear design Frank Muytjens and a few short months later, the big guy himself, CEO Mickey Drexler. As if that wasn't enough, the man set to take over the responsibilities of both Lyons and Muytjens — Somsack Sikhounmuong — left his role as chief design officer after just five months, at which point J. Crew eliminated the position and transferred his responsibilities to existing members of the team.
Just like that, all of the people who defined J. Crew's style were gone. Lyons and Drexler were responsible for J. Crew's iconic line of colorful cardigans, preppy skirts and otherwise upscale (and pricey) basics. While their efforts were met with plenty of success, by 2015 comparable sales slumped 8.2% as Drexler blamed J. Crew's problems on cardigans and quality issues.
The Year of Executive Shake-Up's
President and Executive Creative Director
Head of Menswear Design
Chief Design Officer
Drexler's reign at J. Crew, as long and impactful as it was, could not save the retailer from a giant debt load and falling sales. And while he did bring the much more successful Madewell brand to light, the young banner hasn't given the flagship brand enough of a boost to override its failings. So how exactly did Drexler fail J. Crew? By ignoring the customer's wants and straying away from the brand's image, according to Mark Cohen, director of Retail Studies at Columbia Business School and former CEO of Sears Canada.
"At J. Crew, it was the Mickey and Jenna show, and Mickey said that the reason they weren't doing well is that they picked the wrong cardigan," Cohen told Retail Dive in June. "But it was a lot more than a cardigan. It was that the J. Crew core customer had been rejecting the brand for the last four years."
Now, under former West Elm President James Brett, the retailer has seasoned executives to replace, debt loads to pay off and consumers to win back — and a new place on Fitch Rating's Secondary Loans of Concern list, which was emailed to Retail Dive in October. And despite a debt swap back in June, which included an exchange offer and refinancing, as well as an extension on the maturity of some loans, the company's debt was reduced by $300 million, according to COO Michael Nicholson.
J. Crew total salesSource: SEC Filings
J. Crew maintains debt load after 2012 spikeSource: SEC Filings
But the $1.51 million remaining debt J. Crew reported in its most recent 10-K filing isn't being helped by stagnant sales. Since 2012, both J. Crew's total sales and total debt have remained relatively flat. End of year 2012 saw J. Crew record $2.23 billion in total sales and $1.53 million in debt — numbers that have since changed to $2.43 billion and $1.51 million respectively (as of January 28, 2017). And that's after years of trying to turn it around. Needless to say, the future of J. Crew is looking bleaker at the end of this year than it was at the beginning and not much good has happened to offset the retailer's numerous struggles.
It's unclear how J. Crew will fare in the future, or whether it can ever truly dig itself out of this hole, but Howard Davidowitz, chairman of New York City-based retail consulting and investment banking firm Davidowitz & Associates, certainly isn't banking on it.
"For J. Crew, in my opinion, it's over, because there is no way to deal with the debt," Davidowitz, told Retail Dive at Drexler's departure. "It's impossible."