J. Crew isn’t fully recovered from its troubled times just yet.
Though its fourth quarter results weren’t nearly as dismal as its previous quarters, sales are still down. Comparable sales for the fourth quarter were down 5%, and comparable sales for the entire year were down 10%.
Comparable sales for the parent company were down 4% for the fourth quarter and 8% for fiscal 2015.
Though the apparel is seeming to be less alienating and more in line with what J. Crew customers want, the company now has to convince consumers to pay full price — something that could be a challenge and could hinder its comeback, especially considering how the company has been routinely discounting apparel.
“Thanks to changes made by management across the year, many of J. Crew’s full line stores are now looking much more disciplined in terms of merchandising and display. However, as much as this is true, products are still priced above what many consumers are willing to pay — especially for relatively simple garments that have nice detailing but little else in terms of fashion credentials,” Neil Saunders, CEO of consulting firm Conlumino wrote in a note to clients.
“The issue of price is underlined by the fact that while J. Crew’s mainstream stores suffer, J. Crew Factory stores are fairly popular with more shoppers willing to buy its products at a reduced price. This isn’t the position that the company would like to be in, but it is one that reflects the fact that there is much more work to do in terms of refining the brand image and the product offer so that it can attract the premium J Crew wants to charge.”
“That people are unwilling to pay full price means that discounting at mainstream stores and via the mainstream website is also very frequent. While this is a necessary evil to clear down inventory, J. Crew is building a reputation as a retailer from which customers should never buy at full price — something that is hampering its ability to rebuild its brand and price integrity,” he wrote.
This is a problem that other retailers have, too.
Nordstrom permits customers to return items to its off-price store, Nordstrom Rack, thereby convoluting the brand’s overall reputation.
“As more customers view Nordstrom Rack as their Nordstrom experience versus the full-price store, how do you not have the brand get less special or more associated with off-price over time?” Liz Dunn, CEO of Talmage Advisors, said to Buzzfeed.
As a whole, thanks to the proliferation of outlet stores like Macy’s Backstage and affordable fast fashion chains like Zara, consumers are becoming increasingly conditioned to not pay full price when they don’t have to.
If J. Crew wants people to pay full price, they will have to work extra hard to convince shoppers to do so.
“The market is more competitive and crowded than ever and J Crew needs to do much more to stand out,” Saunders wrote.
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