J. Crew reported Wednesday a second quarter total revenue decline of 4% down to $569.8 million amid what CEO Mickey Drexler called a "challenging traffic environment.” Its Q2 net loss narrowed to $8.6 million, compared to $13.6 million in the year ago period.
Overall Q2 same-store sales decreased 8% compared to a decrease of 11% in the second quarter last year. J.Crew sales decreased 6% to $476.7 million, while same-store sales decreased 9%, compared to a 13% decrease last year.
The retailer’s lower-priced Madewell brand performed better: Q2 Madewell sales rose 15% to $78.3 million, and its same-store sales increased 3%, compared to its 8% increase in the same period last year.
J. Crew, unlike rival Gap, is betting on stores to boost its fortunes. The Wall Street Journal reports that J. Crew plans to open 36 new stores this year, including three flagship J. Crew retail locations, 23 factory stores and 10 Madewell stores.
Earlier this week, the retailer also announced it will feature J. Crew women’s apparel at Nordstrom stores, bolstering an already successful partnership the department store has held with its Madewell brand.
But J. Crew is continuing to suffer a sales tumble. Its flagship label has lost a reputation for quality as consumers opt for lower-priced apparel at fast-fashion stores and its own Madewell brand. The brand is akin to Gap’s Old Navy, which J. Crew CEO Mickey Drexler introduced during his time as Gap’s CEO in the late 90s.
Its second-quarter sales drop is its eighth straight quarter of declines, and its 8% same-store sales decrease was worse than declines from the first quarter, according to Bloomberg.
In his statement Wednesday, Drexler expressed confidence in the company’s ability to “evolve” the flagship and Madewell brands. He also noted the progress in finding supply chain efficiencies — a key these days as fast fashion has conditioned shoppers to expect retailers to quickly restock their favorite styles and roll out a constant stream of new ones.
But it’s not clear that J. Crew will be able to recover a reputation for high quality classic fashion, which filled the closets of loyal consumers for years. Its prospects, even with its new Nordstrom deal, could be hampered by prevailing pressures from fast fashion to keep merchandise "fresh," according to Jeff Edelman, director of consumer products industry at consulting firm RSM.
“J. Crew has been suffering from the same factors that typically impact narrowly focused specialty stores," he said in an email to Retail Dive. "It is generally difficult to create sufficient newness each season within its core merchandise and design strengths."
In addition, styles are being seen at several retailers at once as fashion trends are copied, thwarting any sense of exclusivity, Edelman said.
"[S]uccessful products or looks can be easily copied, to the point where they are over exposed," he said. "The same has happened at Gap and a number of other teen retailers. It has been virtually impossible for retailers to move quickly enough with its customers. Expanding distribution to Nordstrom will add incremental volume at the outset and potentially reach different shoppers, but it is not likely to solve the overarching tired fashion issue.”