Libby Wadle knows J.Crew Group has a lot of work to do. In an effort to restore itself to health, the iconic U.S. retailer must win back its once loyal customer base.
Wadle, a longtime executive at J.Crew and its thriving Madewell denim brand, took the helm last November soon after the company emerged from bankruptcy protection. Despite product misses, e-commerce flubs, and quality issues, she sees a huge reservoir of goodwill she can tap into. All the more so given the clean slate J.Crew got from Chapter 11 in the form of fewer stores and a cleaner balance sheet, plus pent-up demand for new clothes post-pandemic.
“Everyone has a J.Crew love story, but more and more people, I think, have had a J.Crew breakup story. They want to find that love connection again,” Wadle, 48, tells Fortune in her first in-depth interview as CEO.
Rekindling that love could prove to be a Sisyphean task for the $2.5-billion-a-year retailer. In addition to all the turmoil wrought by the COVID pandemic and the bankruptcy filing, Wadle has to steady a company beset by significant turnover in the C-suite in the past half-decade—she is the fourth CEO in as many years—and navigate deep changes in how people are shopping for clothes. She also has to contend with resurgent rivals like Levi’s and Abercrombie & Fitch.
In March, ratings agency Moody’s Investors Service flagged J.Crew’s “relatively small scale, high fashion risk, and exposure to margin pressure from e-commerce investment” to explain its junk rating on the company’s debt, even though it’s much lower post-bankruptcy.
For Madewell, a 145-store chain Wadle led from 2017 to 2020 to great financial success, the task will be more about managing growth and correctly anticipating fashion trends, since the business is fundamentally sound and has a clear place in shoppers’ minds. “Madewell will always lead with denim; it will always be founded in denim,” she notes. Wadle adds that Madewell’s name recognition remains low outside certain big markets, leaving it with much upside.
But for the nearly $2 billion (pre-pandemic) J.Crew brand, which has some 151 stores and a chain of outlet stores, the reconstructive surgery will be more complex. Prior to the COVID-19 outbreak, J.Crew had been struggling to stop a yearslong erosion in sales and, frankly, interest from customers.
J.Crew had strayed from a winning formula that had for years made it the place where men and women could get clothes for the office or some quality T-shirts and sweaters for the weekend, without going too far into fashion-chasing.
The brand’s problems grew worse as its parent company’s C-suite became host to a revolving door of executives. But with Wadle in the corner office, don’t expect the J.Crew brand to chase fashion trends or overly formal clothing so much as keep fresh its offering of classic J.Crew clothing.
“We went through a work-wear phase, but we really have casual roots, and I think an easygoing approach to a lifestyle assortment will always be what J.Crew is about,” she says.
The brand’s next big test will come this autumn when the first products designed by its women’s wear director, Olympia Gayot, hired in October, hit stores. Wadle made another splashy hire in June, when she named Brendon Babenzien, one of the key architects behind the ascent of perennially cool street-wear label Supreme, to lead the J.Crew men’s business.
“He strikes that great balance of really good design, great taste, real attention to detail and quality, but also knowing how to be culturally relevant,” she says.
And getting that right will be key to helping her finally rein in the perpetual deep discounts that have decimated the J.Crew brand over the years. “What drives price integrity is having not too much inventory,” says Wadle. “And it’s also really strong product design.”
Given that the J.Crew brand made up about 75% of company sales pre-pandemic (it no longer publishes financial results), there will be no fixing J.Crew Group without fixing J.Crew itself, regardless of how well Madewell does.
“At the end of the day for J.Crew, it’s going to be about great product, great storytelling, and great design, and really getting that energy back in the brand,” she says.
Some much needed stability
When Wadle was named CEO last November, replacing Jan Singer, previously a senior executive at Victoria’s Secret, after only 11 months, it raised worries about renewed turmoil at a company in desperate need of stability. Singer had filled a CEO role left unoccupied for 15 months in the wake of former West Elm executive Jim Brett’s departure; he had served as chief for just over a year.
But as a longtime J.Crew executive, with ample time at both brands and as head of the $600 million Madewell business, Wadle knew where all the bones were buried and has since sought to lead the company with a steady hand that an external CEO coming in with guns blazing might not have.
“I do understand the fundamentals of the business; that’s helpful,” says Wadle. “I’ve been through a lot of it, and you don’t have that knee-jerk leadership that tends to happen sometimes.”
At the same time, she understands J.Crew has to evolve without falling into its old trap of confusing shoppers with constantly changing aesthetics and irritating them with product problems, or subpar e-commerce. (Wadle says the company’s larger capital projects will involve e-commerce rather than new stores.)
And America’s reopening post-COVID is giving J.Crew a new chance to win back its shoppers. Americans are indeed renewing their wardrobes: According to NPD Group, clothing sales in the past three months are a low-teens percentage higher than where they were in 2019.
As is the case with rivals like Levi’s, Abercrombie & Fitch, Target, and Kohl’s, J.Crew is seeing shoppers gravitate to a more relaxed fit even as they start to shed sweatpants in favor of dressier clothing. Wadle points to new prints and color palettes at J.Crew, different, looser leg shape trends at Madewell, and more mixing of denim on the bottom and a tailored suit jacket on top; areas, she says, that play to the company’s strengths.
“We’re feeling like we have a great opportunity to reset the base and get back to a really healthy business,” she says. “So it’s good.”
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