J.Crew has laid off 10 percent of its corporate staff and ousted its head of women’s design, Tom Mora. The news was first reported by Racked and confirmed by the company in a press release. The cuts come six days after a quarterly earnings report in which total revenues decreased two percent and J.Crew brand sales decreased five percent, while its Madewell brand sales increased 33 percent. Meanwhile, the company is still suffering under crushing debt related to its $3 billion leveraged buyout in 2011.
As a press release noted, “During the first quarter, the Company experienced a further significant reduction in the profitability of its J.Crew reporting unit, primarily driven by performance of women’s apparel and accessories, which the Company expects to continue at least through fiscal 2015.”
Mora is being replaced by Somsack Sikhounmuong, the head of design at the company’s younger (in age and sensibility) Madewell brand. Other “strategic and organizational changes” involved trimming and streamlining staff in store operations, production, sourcing, and merchandising.
The flagship J.Crew brand has been challenged by a growing dissatisfaction and declining sales among its loyal customers in recent years. While it has been boosting its red carpet cred by showing at New York Fashion Week and partnering with the CFDA/Vogue Fashion Fund (Council of Fashion Designers of America) these past five years to promote emerging designers, it has been producing its own couture Collection. All the while, its prices have steadily increased, critics argue its quality has decreased, and it has lost touch with its core customers.
Some longtime fans who have followed the brand’s evolution from preppy chic to more cutting-edge fashion have been willing to take that journey with former creative head-turned-president, Jenna Lyons. She is widely credited with turning J.Crew into a cult brand, and has inspired a cultish following of her own. Yet she’s staying on—for now, at least—while Mora, who reported to her, is taking the fall.
— Rachel Daily (@Rad_Works) June 4, 2015
A TIME 100 honoree in 2013 for her clout as a taste-maker and influencer who saw First Lady Michelle Obama dress herself and her daughters in J.Crew, Lyons’ point of view and sensibility are threaded in its DNA, from her usually intriguing “Jenna’s Picks” gallery of her current obsessions to choosing designer collaborations, big and small. She approves virtually every item, every detail that goes into the entire J.Crew customer experience.
In addition to overseeing the creative, merchandising and operational team, Lyons has been busy expanding the brand overseas, with new stores in London (including a Crewcuts kids boutique in Harrods), Paris and Hong Kong. Lyons has admitted that pricing and other local issues have made overseas expansion a challenge.
The heart of brand loyalists’ complaints lies with style, which has become increasingly unrelatable and unwearable at work while missing the opportunity to put its spin on the athleisure trend of casual chic workout wear. As Mora told Refinery29 of the “challenging” mix of edgier, high-end clothing with the chic wardrobe staples its loyalists demand, “I wouldn’t say that they’re challenges. I just think that it’s really about pushing the customer.” Customers want to be understood, delighted and engaged, however—not pushed.
Further infuriating its fan base, J.Crew discontinued staples such as the beloved Cece ballet flat, only to resurrect it in a lesser quality (apparently not paying attention to customer reviews on its own website); introduced odd items like the ill-fitting Tilly sweater; increased prices; and baffled fans with sizing such as the triple-zero size for its customers in Asia.
And in a death-blow to a lesser brand, there have been the complaints about quality, with fans complaining to each other on blogs and to the media about shoes and other purchases falling apart. Instead of hitting the stores, website and catalog, they’ve been forced on a nostalgia trip through eBay (the one place where J.Crew is doing a roaring trade) to pick up classic items they miss. As BuzzFeed notes, the changes inspired an “open letter” on The Hairpin blog and the hashtag #revivejcrew to share complaints such as this one, regarding a t-shirt:
— Stephanie C. (@urbancowgirl305) April 1, 2015
As Wall Street Journal style reporter Elizabeth Holmes recently detailed in an excellent overview of the brand’s core issues, loyalists “have complaints about head-scratching styling, poor garment construction and fabric quality, and inconsistent sizing have popped up online and on social media. J.Crew itself has acknowledged it has problems with its women’s clothing and says it is trying to fix them.”
— Elizabeth Holmes (@EHolmesWSJ) June 11, 2015
Of course, Lyons is not singlehandedly to blame and she has her defenders, and is no doubt feeling the brunt of disappointment from a fan base that can be obsessed with her style, her office, her former home and her glamorous (but not that glam, as she has bluntly pointed out) career and lifestyle.
In addition to transitioning her design team, Lyons and chairman and CEO Mickey Drexler are overseeing the challenge of getting the brand back on-track, from fashion, quality and sizing issues to tweaking pricing and expanding its lower-priced J.Crew Factory stores, with 21 locations in the pipeline.
The decision to eliminate about 175 positions, according to a press release, “reflects J.Crew Group’s commitment to long-term growth, and at the same time, streamline operations to support its omnichannel business and reduce overall expenses.”
“We are making meaningful and strategic changes across our organization to better position us for future growth. While many of these decisions were difficult, they are necessary,” stated Drexler. “With Somsack in his new role, we will continue to focus on making critical improvements to our J.Crew women’s assortment including fit, design aesthetic and styling. We know what needs to be done and while many of these initiatives take time, we have a committed team in place to make it happen.”
“We continue to have confidence in the future growth of J. Crew,” he added in a statement to the New York Times. “While our performance has not been where we want it to be, we are making the necessary fixes to our product to deliver what our customers know and love from us.”
Hale Holden, a Barclays credit analyst, told the Times that investors are divided on J. Crew’s future. “It really depends on whether you believe this is a fashion cycle and that they can reimagine themselves out of it,” he said, “or whether they’ve created a tarnished brand and can’t get the consumer back.”
As the New York Times noted in a separate column alluding to the company’s “Great Man Dilemma” by Steven Davidoff Solmon analyzing the J.Crew Group and J.Crew brand’s woes:
Absent from (its latest earnings) call was any grand vision of what J. Crew should be and where it should go other than a return to classic styles and basics. This is a turn from what the company’s creative director, Jenna Lyons, has pushed — trying to sell more fashionable and expensive goods to compete with the fashion crowd. The schizophrenic tension between being a runway sensation and meeting everyday needs was illustrated last week when J. Crew served doughnuts in honor of National Doughnut Day along with a 40 percent off sale. Fashion mavens do not eat doughnuts.
While not entirely true, point taken: J.Crew must get away from the cult of personality around its brand president and obsess about one personality only—that of its customer.
Shirley Brady is editor-in-chief of brandchannel. Follow her on Twitter: @shirleybrady