The presentation about J Crew study in the link below: http://www.slideshare.net/TranThang6/j-crew-in-2014-will-it-turn-around-strategy-improve-its-competitiveness-58553487

2. J. CREWS ED?

3. Market Overview &
Company Analysis
Current Situation
Analysis
Strategies AnalysisRivals Analysis
Recommendations
Contents

4. • Size of the market: $249 billion in 2014
• Growth rate: 2013-2014: 1.6%
2012-2013: 2.9%
2011-2012: 4.8%
• The industry is in mature stage
• Value of product shipment in US: $12.86 billion
• Imported countries: China, Vietnam, Bangladesh…
U.S APPAREL INDUSTRY
 Overview

5.  Key successful factors
Brand name
Multi-channel retailing
Fashion trend
Fashion revolutions
Price policy
Turnover speed
Marketing Strategy
U.S APPAREL INDUSTRY

6. U.S APPAREL INDUSTRY
 10 Biggest Companies in 2014

7. U.S APPAREL INDUSTRY
 Macro – Environment Analysis

8. Global
- Expansion trend
- Asia, Middle East growing markets
- Price of imported materials (cotton)
Legal Regulatory
- Trade regulation elimination
- Cost Reduction with offshore manufacturing
- Lower tariffs with Free Trade Agreement
Environmental
- Eco-friendly materials development & careful
material selection
- Supplier qualification monitoring processes
- “Go-Green” in supply chain, product offerings
- Brand image enhancement
Technological
- Online transaction replacement for real-time
ones
- Primary social networking marketing tools
- Ecommerce for purchasing, comparing prices
- Brand loyalty reduction with internet sales
Economic driving forces increased demand &
competition in the market
U.S APPAREL INDUSTRY
 Macro – Environment Analysis  PESTLE Analysis

9. HIGH BUYER POWER
-Low switching costs
-Rewards program deters switching
-Trends easily imitable
MEDIUM THREAT OF NEW ENTRANTS
-Subsidiaries to leverage distribution
channels
-Word of mouth marketing strategy
-High capital requirements
-In-house manufacturing chances
MEDIUM POWER OF SUPPLIERS
- Medium pressure on prices
- Low concentration: multiple
manufacturers
- High dependent manufacturers
HIGH THREAT OF SUBSTITUTES
-Increase in the usage of e-shopping
-Increase in the usage of discount stores
-Wide range of products
- Collaborations with popular brands
HIGH THREAT OF RIVALRY
-Multiple competitors
-Average industry growth
-Fairly transparent strategies
(latest trends)
Mature,
Fragmented
Market
U.S APPAREL INDUSTRY
 Macro – Environment Analysis  5 Forces Analysis

10. J.CREW OVERVIEW
1947: Founded by Mitchell Cinader and Saul Charles under the name
Popular Sales Club
1983: Mailed out First catalog to customers
- 1989: Changed its name to J. Crew Group, Inc.
1989: Opened First flagship store at New York's South Street
Seaport
2003: Mickey Drexler joined J. Crew as chairman and CEO
2008: Jenna Lyons became J. Crew creative director
- 2011: J. Crew was acquired by TPG Capital, LP, and Leonard Green &
Partner for approximately $3.1 billion
J. CREW Information
 Key dates

11. J. CREW Information
 Brands

12. Retail
stores
ENGLAND
HONGKONG
FRANCE
JAPAN
CANADA
USA
E-
COMERCIAL
WEBSITE
SHIPPING TO
OVER 100
COUNTRIES
J. CREW Information
 Distribution Channels

13. Bronx high
school of science
City College of
New York
University of
Buffalo
Boston University
Graduate School
of Management
(MBA)
 Management Board  Mickey Drexler, CEO
- Educational Background:
J. CREW Information
- Management Style:
https://www.youtube.com/watch?v=6lfC38NY4-E

14.  Management Board  Jenna Lyons, Creative Director
J. CREW Information

15. Strengths:
• Multiple sales channels
• Strong & Varied product lines
• Brand loyalists
Weaknesses:
• Geographic concentration
• Overdependence on suppliers
Opportunities:
• Positive Outlook for Apparel Market
• Growth in E-Retail
• Expansion Initiatives
Threats:
• Rapid changes in fashion trends and
consumer preferences
• Fierce Competition
• Rising production costs & manpower
costs
J. CREW Current Situation
 Company Competitiveness  SWOT Analysis

16. J. CREW Current Situation
 Company Competitiveness  Value Chain Analysis
INFRASTRUCTURE
HUMAN
RESOURCE
MANAGEMENT
1.Get clothes from outsourced
manufacturing suppliers to store in
Lynchburg, Virginia, and Asheville,
North Carolina distribution centers.
2. Enforce ethical guidelines with
suppliers
1. Design clothes to
meet market trends
2. Drive in-store
operational efficiency
3. Increase inventory
turnover ratio
1.Customize inventory
carried in store
2.Operated under
multiple brands –
CrewCut,…
1.Multiple locations
2.Multiple channels:
stores, direct
channels,…
3. Role models
1. In-store customer service
2. Reduced shipping time
3. Personalized recommendations
4. Loyalty programs
+ Over 500 + store locations, factories
+ Multiple retail channels - stores, online, phone
TECHNOLOGY
PROCUREMENT
+ Partnership with FiftyOne for technical management platform (enable payment in 41 currencies in 107 countries (2012))
+ Intercom system to communicate
+ In-store operational efficiency monitoring program
+ Leadership focused on operational efficiencies
+ Strong design team
+ Employee training
Diversified sourcing network with multiple suppliers:
+ Buying agents
+ Trading companies
+ Manufacturers
INBOUND
LOGISTICS OPERATIONS
OUTBOUND
LOGISTICS
MARKETING &
SALES
SERVICE
Value
sourced from 230 vendors who operate 385 factories in 22 countries, but the bulk
comes from Asia, mostly China and Hong Kong. Only 2% from the US.
Top 10 vendors supplied 46% of merchandise

17. Condensed Consolidated Income Statement
Unit: 1000 $
First Nine Months
Fiscal 2012 Fiscal 2013 Fiscal 2014 Fiscal 2015
Net sales:
Stores 1,129,769 1,199,534 1,674,424 1,542,246 J.Crew -7.89%
Direct 434,167 517,795 171,683 208,470 Madewell 21.43%
Other 20,882 24,711 28,248 44,151
Total revenues 1,584,818 1,742,040 1,874,355 1,794,867
Cost of goods sold, including
buying and occupancy costs
845,223 988,537 1,146,957 1,135,745
Gross profit 739,595 753,503 727,398 659,122
Gross profit margin 46.70% 43.30% 38.80% 36.70%
Condensed Consolidated Income Statement
Unit: 1000 $
First Nine Months
Fiscal 2012 Fiscal 2013 Fiscal 2014 Fiscal 2015
Selling, general and administrative expenses 527,357 540,534 609,724 605,336
As a percent of revenues 33.30% 31.00% 32.50% 33.70%
Impairment losses — 673 683,985 1,380,324
Operating loss 212,238 212,296 (566,311) (1,326,538)
Operating profit margin 13.40% 12.20% (30.2%) (73.9%)
Interest expense, net 74,860 78,386 57,142 52,344
Loss before income taxes 137,378 133,910 (682,239) (1,378,882)
Benefit for income taxes 51,496 51,703 (55,058) (143,238)
Net loss 85,882 82,207 (627,181) (1,235,644)
J. CREW Current Situation
 Facing problems  Financial Performance

18. J. CREW Current Situation
 Facing problems  Financial Performance
Condensed Consolidated Balance Sheets
(in thousands)
February 2,
2013
February 1,
2014
January
31, 2015
Assets
Current assets:
Cash and cash equivalents 68,399 156,649 111,097
Inventories 265,628 353,976 367,851
Prepaid expenses and other current assets 65,791 56,434 60,734
Prepaid income taxes 11,620 2,782 —
Deferred income taxes, net — 11,831 19,280
Total current assets 411,438 581,672 558,962
Property and equipment, net 324,111 375,092 404,452
Favorable lease commitments, net 35,104 26,560 —
Deferred financing costs, net 35,104 41,911 22,883
Intangible assets, net 975,517 966,175 836,608
Goodwill 1,686,915 1,686,915 1,124,715
Other assets 1,778 3,895 3,993
Total assets 3,486,714 3,682,220 2,951,613
(in thousands)
February 2,
2013
February 1,
2014
January
31, 2015
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable 141,119 237,019 244,367
Other current liabilities 153,743 154,796 155,697
Interest payable 18,812 18,065 5,408
Income taxes payable — — 3,192
Current portion of long-term debt
12,000
12,000 15,670
Total current liabilities 325,674 421,880 424,334
Long-term debt, net 1,567,000 1,555,000 1,532,769
Unfavorable lease commitments and deferred
credits
71,146 93,788 112,153
Deferred income taxes, net 392,984 389,403 323,767
Other liabilities 38,419 31,729 42,566
Stockholders' equity 1,091,491 1,190,420 516,024
Total liabilities and stockholders' equity 3,486,714 3,682,220 2,951,613
Liquidity Ratio
Current Ratio (X) 1.26 1.38 1.32
Quick Asset Ratio (X) 0.45 0.54 0.45
Capital Structure Ratio
Equity Ratio (%) 31.30 32.33 17.48

19. J. CREW Current Situation
 Facing problems  Poor financial Performance
• Weak profitability
• High inventory
• High debt capital structure
(More borrowings under the Asset
Based Leading Facility:
20,000October 31, 2015)
• Tilly sweater failure
• Expansion policy

20. J. CREW Current Situation
 Facing problems  Customer loyalty decrease
http://www.businessinsider.com/jcrew-decline-jenna-lyons-sales-fashion-low-sales-2015-6

21. J. CREW Current Situation
 Facing problems  Customer loyalty decrease
 Inconsistent Design
 Low Quality
 High Price

22. J. CREW Current Situation
 Upcoming Plan
1. Expanding Madewell chain: 20 new more this year (current fleet of 85), bringing
Madewell past the 100-store count in 2015
2. Opening more J.Crew discount outlet stores: 21 new outlets to current fleet of 139
discount locations in 2015
3. Running more international stores: 6 new international stores with current 14 (6 in
Canada, 5 in the U.K., 2 in Hong Kong, and 1 in France.)
4. Fixing women’s fashions: Somsack Sikhounmuong will take over the J.Crew brand
women’s line immediately, replacing Tom Mora, turn back to classic style
5. Launching a new, lower priced chain: J.Crew Mercantile - “a collection of value-driven
merchandise with classic J.Crew style for women, men and children” - features the same
products specifically designed for and sold at J. Crew’s factory locations.
 HIGH ADAPTABILITY

23. • A firm’s competitive strategy deals are its efforts to position in
the market, please customers, fight against competitors, and
achieve a particular competitive advantage.
Is the competitive advantage
pursued linked to low costs
or product differentiation?
Is the firm’s market target
broad or narrow?
Key factors that
distinguish one strategy
from another
J. CREW Strategies Evaluation
 Why different strategies?

24. J. CREW Strategies Evaluation
 5 Generic Competitive Strategies

25. Low-Cost
Provider
Striving to achieve lower overall costs than rivals on
products that attract a broad spectrum of buyers.
Broad
Differentiation
Differentiating the firm’s product offering from rivals’ with
attributes that appeal to a broad spectrum of buyers.
Focused
Low-Cost
Concentrating on a narrow price-sensitive buyer
segment and on costs to offer a lower-priced product.
Focused
Differentiation
Concentrating on a narrow buyer segment by meeting
specific tastes and requirements of niche members
Best-Cost
Provider
Giving customers more value for the money by offering
upscale product attributes at a lower cost than rivals
J. CREW Strategies Evaluation
 5 Generic Competitive Strategies

26. J. CREW Strategies Evaluation
Focused Differentiation
• Premium price
• High quality
• Classic, preppy style
• Upper-middle class customers
 5 Generic Competitive Strategies  J. Crew decision

27. J. CREW Strategies Evaluation
 5 Generic Competitive Strategies  Features

28. J. CREW Strategies Evaluation
 5 Generic Competitive Strategies  Features

29. J. CREW Rivals Evaluation
 Focused differentiation
 High price for high quality
 Sustainability
 Broad differentiation
 Different strategies for
different brands

30. J. CREW Rivals Evaluation
Rival
Brand
value
Revenue
Global Supply
chain
Quick
Turnover
Price Policy
Trendy
Clothing
Zara $ 9.4b $ 14.8b x x
Budget-consious
consumer
x
H&M $ 15.3b $ 21.2b x x Affordable price x
Ascena
Retail
$ 4.8b x Moderate price
Ann Inc $ 2.5b x Upper-moderate pricw
Forever 21 $ 4.4b x x
Budget-consious
consumer
x
J.Crew

31. Improve Value Position with Customers
Industry Recommendations
 Better communicate refreshed brand image
• Improve social networking site
• Offer frequent promotions
• Increase online advertising
• Offer in-store networking/product launch events
 Build customer relationships
• Track customer engagement
Leverage Core Competencies and Resources
 Partner with supply chain management firm
• Provides company with new process knowledge
• Diversifies sourcing risk
• Identify higher quality materials
 Broaden customer segment
• Fast growing market with high discretionary income
• Leverage resources to achieve expansion

32. J. CREW Recommendations
• Develop Madewell, J. Crew Factory and J. Crew men’s line
• Invest in advertising (celebrity endorsements, new campaigns…)
• Enhance uniqueness
– Concept
– Designs
Is it time for a new creative director?

33. References
Ann Inc. profile (2015). Retrieved February 17, 2016, from http://www.vault.com/company-profiles/retail/ann-
inc/company-overview.aspx
Avella, J. (2015, June 23). The ugly secret behind why J. Crew's sales have tanked. Retrieved February 17,
2016, from http://www.businessinsider.com/jcrew-decline-jenna-lyons-sales-fashion-low-sales-2015-6
Constable, S. (2015, June 15). J. Crew or J. Screwed? Retrieved February 17, 2016, from
http://www.forbes.com/sites/simonconstable/2015/06/15/j-screwed/#d70246222643
Creative director Jenna Lyons on creating J. Crew's unique look (2012). Retrieved February 17, 2016, from
https://www.youtube.com/watch?v=igoV4UML0WY
Eliza (2015). How to fix J. Crew - a request from a longing customer. Retrieved February 17, 2016, from
http://www.howtofixjcrew.com/
Forever 21 on Forbes lists (2015). Retrieved February 17, 2016, from http://www.forbes.com/companies/forever-
21/
Friedman, V. (2015, June 11). Can a new designer (not Jenna Lyons) fix J. Crew? Retrieved February 17, 2016,
from http://www.nytimes.com/2015/06/12/fashion/somsack-sikhounmuong-of-madewell-becomes-
womens-wear-designer-at-j-crew.html?_r=0
Holmes, E. (2015, May 26). Dear J. Crew, what happened to us? We used to be so close. Retrieved February
17, 2016, from http://www.wsj.com/articles/dear-j-crew-what-happened-to-us-we-used-to-be-so-close-
1432661954

34. References
J. Crew and the man who dresses America. (2015). Retrieved February 17, 2016, from http://www.cnbc.com/j-crew-
the-man-who-dressed-america/
J. Crew brought low by a cropped sweater (2015, June 15). Retrieved February 17, 2016, from
http://www.datamyne.com/blog/imports/j-crew-brought-low-by-a-cropped-sweater/
J. Crew Group, Inc. announces third quarter fiscal 2013 results (2013, December 04). Retrieved February 17, 2016,
from http://www.prnewswire.com/news-releases/jcrew-group-inc-announces-third-quarter-fiscal-2013-results-
234480221.html
J. Crew Group, Inc. announces third quarter fiscal 2014 results (2014, December 04). Retrieved February 17, 2016,
from http://www.prnewswire.com/news-releases/jcrew-group-inc-announces-third-quarter-fiscal-2014-results-
300005184.html
J. Crew Group, Inc. announces third quarter fiscal 2015 results and appoints Michael J. Nicholson President, Chief
Operating Officer and Chief Financial Officer (2015, December 03). Retrieved February 17, 2016, from
http://www.prnewswire.com/news-releases/jcrew-group-inc-announces-third-quarter-fiscal-2015-results-and-
appoints-michael-j-nicholson-president-chief-operating-officer-and-chief-financial-officer-300187904.html
J.Crew vs. Anthropologie: Competitive brand analysis (2015). Retrieved February 17, 2016, from
http://info.crimsonhexagon.com/hubfs/Downloads/Case-Study--JCrew-vs-Anthropologie.pdf
Lu, S. (2015). 2015 US Fashion Industry Benchmarking Study. Retrieved February 17, 2016, from
https://www.usfashionindustry.com/pdf_files/USFIA-2015-Fashion-Industry-Benchmarking-Study.pdf

35. References
Mickey Drexler CNBC Documentary - J. Crew and the man who dressed America (2012). Retrieved February 17,
2016, from https://www.youtube.com/watch?v=6lfC38NY4-E
Rupp, L., Klein, J.X. (2015, November 25). Why J. Crew is unraveling. Retrieved February 17, 2016, from
http://www.bloomberg.com/news/articles/2015-11-25/with-its-bonds-at-25-5-cents-j-crew-is-now-in-lots-of-
trouble
Thompson, A., Strickland, J., Gamble, J. (2016). Crafting & Executing Strategy: The Quest for Competitive
Advantage: Concepts and Cases. McGraw-Hill Publisher.
Trefis, T. (2015, July 15). Gap Inc. is gradually losing its share in the U.S. apparel market to fast-fashion
counterparts. Retrieved February 17, 2016, from
http://www.forbes.com/sites/greatspeculations/2015/07/15/gap-inc-is-gradually-losing-its-share-in-the-u-s-
apparel-market-to-fast-fashion-counterparts/#47aad05a7817
Wahba, P. (2015, July 10). J.Crew is about to launch a new, lower priced chain. Retrieved February 17, 2016,
from http://fortune.com/2015/07/10/j-crew-discount/
Wahba, P. (2015, March 29). J.Crew’s Drexler bets on Madewell, outlets, and overseas to fix business. Retrieved
February 17, 2016, from http://fortune.com/2015/03/19/jcrew-madewell-outlets-overseas/

36. L/O/G/O