J Crew CEO in ‘worrying’ sudden exit
The sudden departure of J Crew CEO Jim Brett after just 16 months in the role is worrying as it leaves the company leaderless at a time when it desperately needs a focussed effort to rebuild sales and reconnect with consumers.
The suddenness of the exit suggests there is a tussle over how to develop the brand among the various senior stakeholders. Given that J Crew has made a net loss of US$18.5 billion 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.
Under Jim Brett, J Crew had started to recover, mainly thanks to more competitive price points and a refocusing of the product. Other initiatives, like introducing plus sizes, were also helpful in widening the audience. However, the brand is nowhere near back to full strength and the sales results, while going in the right direction, are still fairly soft. More time, and effort, is required for the strategy to come to fruition.
The rebuilding effort is a necessary step after a series of fashion missteps moved the brand away from the classic, preppy basics that were once its heritage. This alienated customers once loyal to J Crew and resulted in many shoppers defecting to other players. The fairly premium price J Crew once expected its customers to pay was also unhelpful – especially when the brand had lost so much of its equity. Today’s more democratic fashion marketplace abounds with retailers selling on-trend, low-priced basics, which made J Crew’s previous position untenable.
Another damaging problem before Jim Brett arrived as J Crew CEO was the attitude of management. J Crew’s leadership were not sufficiently humble about the brand’s status and were rather divorced from the realities of the retail marketplace. 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.
If the departure of Jim Brett hails the return of these unrealistic attitudes, J Crew is going to slip back and undo all of the progress made to date. Given the precariousness of its financial position, this is a mistake it cannot afford to make.
- Neil Saunders is MD of GlobalData Retail.