J.Crew

Formation and catalog growth

In 1947, Mitchell Cinader and Saul Charles founded Popular Merchandise, Inc., a store that did business as Popular Club Plan and sold low-priced women's clothing marketed through in-home demonstrations.[7] Throughout the mid-1980s, sales from catalog operations grew rapidly. "Growth was explosive—25 to 30 percent a year," Cinader later recollected in The New York Times. Annual sales grew from $3 million to more than $100 million over five years.[7] In 1985, the "Clifford & Wills" brand was launched, selling women's clothing that was more affordable than the Popular Merchandise line. In 1987, two executives left the company to start their own catalog, Tweeds.[8]

The 1980s marked a booming sales period for catalog retail giants Lands' End, Talbots, and L. L. Bean. Popular Merchandise initiated its own catalog operation, focusing on leisurewear for upper-middle-class customers, aiming for a Ralph Lauren look at a much lower price. The first Popular Club Plan catalog was mailed to customers in January 1983 and continued under that name until 1989. Popular Club Plan catalogs often showed the same garment in more than one picture with close-up shots of the fabrics, so customers could get a sense of how the garment looked on the body and be assured of the company's claims of quality.[9]

Name change and first stores

In 1983, Popular Merchandise, Inc. became known as J.Crew, Inc, taking its name from the sport crew with a J affixed for graphical appeal.[10] The company attempted but failed to sell the Popular Club Plan brand.[7] Also in 1989, J.Crew opened its first retail store, in South Street Seaport in downtown Manhattan.[11]

J.Crew Group was owned by the Cinader family for most of its existence, but in October 1997, investment firm Texas Pacific Group Inc. purchased a majority stake. By the year 2000, Texas Pacific held an approximate 62 percent stake, a group of J.Crew managers held about 10 percent, and Emily Cinader Woods, the chairman of J.Crew, along with her father, Arthur Cinader, held most of the remainder.[12] The brand Clifford & Wills was sold to Spiegel. in 2000 with the intent to boost sales.[13] In 2004, J.Crew bought the rights to the brand Madewell, a defunct workwear manufacturer founded in 1937, and used the name from 2006 onwards as "a modern-day interpretation", targeted at younger women than their main brand.[14][15][16]

Going public, return to private

In 2006, the company held an IPO, raising $376 million by selling new shares equal to 33 percent of expanded capital. However, in 2011, TPG Capital LP and Leonard Green & Partners LP took J.Crew private again in a $3 billion leveraged buyout.[17] On November 23, 2010, the company had agreed to be taken private in a $3 billion deal led by management with the backing of TPG Capital and Leonard Green & Partners, two large private equity firms. The announcement of the offer from two investment firms—including one that used to own J.Crew—came as the retailer reported that its third-quarter net income fell by 14 percent due to weak women's clothing sales. The company also lowered its guidance for the 2010 year. Under the deal as proposed, J.Crew shareholders would receive $43.50 per share in cash, representing a 16 percent premium to the stock's closing price the prior day of $37.65. CEO Mickey Drexler, the former Gap Inc. chief credited with turning J.Crew around since coming aboard in 2003, remained in that role and retained a "significant" stake in the company (as of September 2010, he holds 5.4 percent of outstanding shares).[18]

Shortly after the announcement of the deal, some in the business community criticized the terms of the deal involving the company's CEO and a majority shareholder.[19] As a result, the "go-shop" period was extended shortly after the initial announcement.[20] In addition, several investigations relating to potential shareholder actions against the company were announced.[21] After the deal, TPG and Leonard Green borrowed more to help finance dividends totaled $787 million to them.[17]

Recent

In June 2015, The New York Times reported that J.Crew's women's division was undergoing a slump because of the company's failure to react to two market trends: cheap "fast fashion" and "athleisure" items.[22] In 2016, J.Crew partnered with Nordstrom to begin selling their products in stores and online.[23] In December 2016, the company faced litigation after it moved its intellectual property "out of the reach of lenders."

In April 2017, the company cut 250 jobs, largely from its headquarters. The company also underwent several management changes, and long-term creative director Jenna Lyons left the company in April.[24] The brand's longtime head of menswear, Frank Muytjens, left the company that month as well,[25] and in June 2017, the company's CEO, Mickey Drexler, announced that he would leaving his CEO role after 14 years with the company.[26] However, Drexler stated he would remain chairman and retain 10% ownership of the company.[27]

On June 12, 2017, J.Crew Group Inc. announced it had "made an offer to some of its bondholders to push back its most pressing debt obligation—about $567 million due in May 2019—and amend its term loan." At the time, J.Crew Group had around $2 billion in debt.[28] Also in 2017, Drexler approached Amazon Inc about selling J.Crew to the tech giant.[29] In the summer of 2017, the company avoided a bankruptcy filing by having bondholders do a debt swap tapping into its brand name value. The majority of the bondholders agreed to the deal, with several others failing to stop the deal with a lawsuit. The deal lowered the company's debt.[30] In September 2018, J.Crew began selling its standalone J.Crew Mercantile brand on Amazon.[31]

On February 16, 2018, J.Crew hired Adam Brotman, a long-time Starbucks executive, as president and chief experience officer.[32] Brotman's first major impact was launching "J.Crew Rewards", the company's first reward program independent of the company's credit card. The rewards program offers free shipping and $5 back for each $200 spent.[33]

In November 2018, J.Crew announced its CEO, James Brett, would step down and be replaced by an office of the CEO consisting of four senior executives from J.Crew.[34] Brett took up the position in June 2017.[35] The company released a press release stating Brett's departure was a "mutual agreement" between Brett and the company's board of directors. Brett was replaced by Michael Nicholson (president and COO), Adam Brotman (president and chief experience officer), Lynda Markoe (chief administrative officer), and Libby Wadle, president of Madewell brand. The new office of the CEO will be responsible for managing J.Crew's operations as the board establishes a permanent management structure.[36][37] On November 29, J.Crew announced the dissolution of their Nevereven, Mercantile, and J.Crew Home sub-brands.[38] On April 11, 2019, J.Crew announced that president and COO, Michael Nicholson, would retain the title of interim CEO, along with the subsequent announcement of Brotman's departure.[39]

J.Crew reported a net income of $1.5 million in the fourth quarter of 2019, up from a net loss of $74.4 million in quarter four of 2018.[40][41][42]

On January 28, 2020, the retailer announced that Jan Singer would assume title of CEO.[43] Singer was previously CEO of Victoria's Secret, Spanx and was an executive at Nike.[44] She was to replace Nicholson, who would assume his previous position.

On May 4, 2020, J.Crew filed for Chapter 11 bankruptcy protection as a result of the COVID-19 pandemic,[45] although the company had amassed enormous debt even before the outbreak.

Chinos Holdings, Inc. and 17 affiliated debtors filed Chapter 11 bankruptcy in the United States District Court for the Eastern District of Virginia. These debtors requested joint administration of the cases under Case No. 20-32181.[46]

In September 2020, J.Crew permanently closed all six of its UK stores after its parent group emerged from Chapter 11 bankruptcy following an approval plan to cut its debts.[47]

In November 2020, J.Crew appointed new chief executive officer. Libby Wadle replaced Jan Singer, who had been CEO for less than a year.[48][49]