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Your local J.Crew may be in for a tough holiday season. On Tuesday, the once-thriving retailer announced another round of disappointing earnings results, along with plans to close a full 50 stores by the end of the year, including 39 in the fourth quarter alone — double the number previously projected.
The news marks the latest blow to a company that just this year has laid off 250 employees, seen two of its top executives step down — president and creative director Jenna Lyons and longtime CEO Mickey Drexler — and struggled to adopt a new digital identity in the face of plummeting sales and waning consumer interest. But while it has cut prices (goodbye, $400 sequin tees) and retooled its print catalog strategy (goodbye, expensive mass mailers), the moves have failed to drive shoppers into brick-and-mortar locations as hoped.
J.Crew reported a 12 percent drop in sales to $430.4 million for the third quarter of fiscal year 2017, following similarly weak earnings last year. Sister brand Madewell fared much better, with sales rising 22 percent to $107.5 million, but overall, its smaller size meant it couldn’t quite make up for losses elsewhere. Costs associated with the layoffs also put a strain on the company’s bottom line.
President, chief operating officer, and chief financial officer Mike Nicholson explained the closures as a necessary part of J.Crew’s increasing efforts to become a “digital-first” business, a major undertaking for a company that’s historically invested so much in brick and mortar, but essential for almost any retailer that wants to grow in the age of e-commerce. Also growing, however, are the number of empty storefronts around the country — and now we can add several dozen more to that list.