J.Crew on Tuesday announced a series of changes aimed to trim expenses: The company will eliminate 250 jobs, mostly from its corporate headquarters in New York, including 150 full-time and 100 open positions, according to a company press release.
The company will garner some $30 million of annualized pre-tax savings in connection with the headcount reduction in force, though the company will record a charge of approximately $10 million in the first quarter of fiscal 2017 for severance payments and other termination costs.
At the same time, the company announced changes to its top ranks, with some executives taking on added duties: Michael J. Nicholson, president/COO/CFO, will assume responsibility for the J.Crew Brand; Lisa Greenwald, previously merchandising SVP at Madewell, has been named J. Crew’s chief merchandising officer; and Libby Wadle, most recently president of the J.Crew Brand, has been named president of the Madewell brand. Though not announced by the company, Business of Fashion also reported Tuesday that longtime J. Crew menswear chief Frank Muytjens will depart.
The shifts and cuts announced Tuesday continue a shakeup announced earlier this month with the stunning news that Jenna Lyons, the style maven who has served as J. Crew’s president and executive creative director since 2012, will leave once her contract ends in December. While Muytjens doesn’t have as high a profile as Lyons, his departure is another signal that the brand is ripping apart its stylebook. Somsack Sikhounmuong, who has been leading J. Crew's women’s design team, was recently promoted to chief design officer, overseeing the women's, men's and crewcuts design teams.
In a statement on Tuesday, J.Crew CEO Millard Drexler said the company is embracing change and making necessary adjustments in a tough retail environment. "We have an incredibly talented team of passionate leaders and will further leverage their strengths and talents as we continue to focus on making critical improvements in our business,” he said.
J. Crew's financial picture has only grown more dire as it has failed to recapture the ardor of even many of its most loyal fans, who have drifted as its apparel has declined in fit and quality while its prices have remained outsized in an era when fast-fashion retailers have provided pleasing styles at drastically low prices.
“J. Crew needs to develop a much clearer brand handwriting and needs to infuse its assortments with pieces that have subtle embellishments,” Neil Saunders, GlobalData Retail managing director, told Retail Dive in an email last month. “This is the thinking that brands like Ted Baker use to stay relevant and to justify the premiums that they charge. At present we believe J. Crew is a very long way from this.”
Reviving J. Crew's consumer appeal is a big ask. J. Crew has tussled with lenders over its efforts to restructure its approximately $2 billion debt load. Six years after TPG Capital LP and Leonard Green & Partners L.P. acquired J. Crew for $2.8 billion and took it private, the retailer looks to be the latest in a string of retailers whose turnaround capital needs bump up against the profit-taking goals of private equity owners. Talk of going public have died down in recent months as J. Crew has continued to falter.
"We take these difficult decisions very seriously, but believe they are absolutely necessary," Drexler also said Tuesday. "We are streamlining our teams as we evolve our business and processes to cater to the new demands of the retail industry. While challenging, we know what needs to be done and this is a critical step to position J.Crew for the future. We are committed to treating impacted associates with respect and support through this period of change."