J.Crew thinks it has found one way to help shake nearly two years of same-store sales declines: selling its flagship brand’s clothes at Nordstrom (jwn).
The struggling apparel chain, which has been grappling with big sales drops after higher prices and fashion misreads angered many in its legions of shoppers, will start selling women’s clothes at 16 of the upscale department store’s locations beginning Sept. 12. Nordstrom already sells J.Crew Group’s Madewell brand at 76 stores and online.
The partnership comes as both retailers grapple with pressured sales and fewer shoppers coming to their stores. The J.Crew brand’s comparable sales decreased 8% in the quarter ended in May, on top of a 10% drop a year earlier. (Madewell, a much smaller business, is growing in contrast.) In the last two years, the erosion of its namesake brand led the company to take a $1 billion write-down. Meanwhile, Bloomberg reported in March that J.Crew’s owner, private equity firm TPG, had written down 84% of its investment in the chain because of a turnaround that has failed to materialize.
Partnering with Nordstrom would give J.Crew exposure to higher-end customers, diversify the physical locations where shoppers can buy its clothes, and make it less reliant on its own stores. It would also help it re-elevate its brand image, which has been dented by a focus on discounts and the expansion of its outlet chain.
As for Nordstrom, offering J.Crew would offer a point of differentiation vis-à-vis rivals like Macy’s (m), Bloomingdale’s, and Neiman Marcus at a time when it faces several quarters of drops in traffic and comparable sales at its full-service department stores. In the most recent quarter, comparable sales fell 2.3% at the main Nordstrom business. The discount Nordstrom Rack business is faring much better.
The move by Nordstrom echoes its exclusive arrangements with brands like Bonobos and Topshop Topman aimed at offering customers merchandise they can find elsewhere, with a view to boosting traffic to stores.
“We both share the same high standards of customer service and store experience,” J. Crew CEO Mickey Drexler said in a statement. “We are known for exceptional design, quality and style, which we know will appeal to the Nordstrom customer.”
The J.Crew items Nordstrom will sell include its Regent and Rhodes blazers, Italian cashmere, outerwear, and Martie pants, among others.
“Partnering with quality brands like J.Crew that have exclusive distribution is part of our long-term strategic agenda,” said Pete Nordstrom, co-president, in the statement.