J. Crew plans new brand for younger women

J. Crew Group will unveil a new brand to appeal to a younger female shopper as the preppy clothing retailer seeks a broader audience for its recovery strategy.

“We see ourselves as having more than two brands. In fact, we’ll be announcing one new brand this year,” CEO Jim Brett said on Bloomberg TV. “It is aimed at women, and it’s younger than any of our existing brands.”

He declined to provide further details.

J. Crew is trying to bounce back from years of lackluster sales. It’s in the midst of remaking its main brand to focus on diversity by offering more size options. The other brand, Madewell, has become a bright spot for the company — appealing to Millennial women by embracing more of a tomboy style with its denim clothing and accessories.

The retailer has posted positive comparable sales — a closely watched measure — for two straight quarters, after years of declines, thanks to strength at Madewell. It has been working to recover from a drop in brick-and-mortar traffic that has been plaguing the industry as people do more of their shopping online. J. Crew is also laboring under debt from a leveraged buyout by TPG and Leonard Green & Partners in 2011.

Brett, who took the helm at the company last year, said the efforts are showing results. The chain has seen more new shoppers and a return of customers who had left, as J. Crew has emphasized inclusiveness through a wider range of sizes and more entry-level prices. The company is also making an effort to keep its Madewell and J. Crew brands unique.

“It’s very important to maintain distinction between the brands,” Brett said. “It wouldn’t do the portfolio any good to cannibalize itself.”

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J. Crew has also teamed up with Amazon.com to offer clothing through Amazon Fashion, and has broadened its reach by selling through Nordstrom stores and its website. Brett said the wholesale approach offers a “huge global opportunity,” citing expansion in Europe and South America. He said J. Crew is also exploring opportunities in Asia.

The retailer’s turnaround strategy will face headwinds from the trade war between Beijing and the Trump administration. Despite the U.S. slapping a 10 percent tariff on purses and other Chinese goods that took effect Monday, J. Crew doesn’t expect to raise prices.

“We have to figure out a way to manage our internal costs to absorb it,” Brett said. “Part of our products, our accessories, our handbags are impacted by the recent tariff. But, you know, it’s our job to make sure we have a highly diversified sourcing strategy.”

Less than one-third of J. Crew’s products come from China, he said. When asked if they may reduce that exposure, he said the retailer is always looking at ways to strengthen its position, and so “will probably become more aggressive on that front.”

Hema Parmar and Emma Chandra are Bloomberg writers. Email: hparmar6@bloomberg.net, echandra6@bloomberg.net