J. Crew CEO out in just over a year
J. Crew Chief Executive Officer James Brett will step down effective immediately, the retailer said on Saturday in a press release.
At issue, apparently, was Brett's turnaround plan. "Returning J.Crew to its iconic status required reinventing the brand to reflect the America of today with a more expansive, more inclusive fashion concept," he said in a statement. "However, despite the recent brand relaunch already showing positive results, the Board and I were unable to bridge our beliefs on how to continue to evolve all aspects of the Company."
Brett arrived in June 2017 from West Elm to take over from longtime CEO Mickey Drexler, who remains on the board.
There was a lot on Brett's plate when he arrived at the apparel retailer a little over a year ago. For years J. Crew struggled with quality, fit and style issues that were driving away longtime fans, at the same time that its private equity owners piled on debt.
The company has been working to swiftly grow its Madewell brand, a Drexler brainchild, because it does so much better than its flagship. Sales had steadied ahead of what Brett had touted as a comeback of the J. Crew quality and style that had long held the ardor of its fans.
But it would always be difficult to orchestrate a major pivot with Drexler, who was CEO for so long and a giant in the industry, still on the board, Mark Cohen, director of retail studies at Columbia University's Graduate School of Business, warned last year. Whatever the reason, Brett's leave-taking now is terrible timing, with its revamp untested and debt towering over it, according to Neil Saunders, managing director of GlobalData Retail.
"The suddenness of the exit suggests there is a tussle over how to develop the brand among the various senior stakeholders," Saunders said in comments emailed to Retail Dive. "Given that J. Crew has made a net loss of $40 million so far this fiscal year, and that it has a $1.7 billion long-term debt pile, it does not have the luxury of switching lanes as it tries to find the best route to recovery."
That debt is likely crippling, according to branding strategist Brian Kelly, president of consultancy Brian Brands, who has managed several retail turnarounds over the years. "Running a brand when burdened by crushing debt eliminates any runway opportunity for successful repositioning," he told Retail Dive in an email.
All the worse if Brett losing a skirmish with the board means that the brand is returning to its old ways, Saunders warned. That includes not only the "series of fashion missteps moved the brand away from the classic, preppy basics that were once its heritage" but also the attitude of management, he said. "J. Crew's leadership were not sufficiently humble about the brand's status and were rather divorced from the realities of the retail marketplace," according to Saunders. "They seemed to cling to the notion that J. Crew was a top-notch brand that deserved to charge top-notch prices — even when customers thought otherwise."
Correction: An earlier version of this story misstated J. Crew's reported financial results. J. Crew's net loss for the fiscal year to date was $40 million.
- Retail Dive A timeline of J. Crew's rise and fall
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