Less than one month after the exit of president, executive creative director and long-time muse Jenna Lyons, contemporary fashion retailer J.Crew Group announced Tuesday that it is undergoing strategic changes, which include trimming its ranks.
The retailer plans to let 250 employees go—150 full-time and 100 open positions—primarily from its corporate headquarters. The reduction in workforce is expected to save the company $30 million, but will cost $10 million in severance and termination costs in the first quarter of FY 2017.
J.Crew chairman and CEO Millard Drexler called the changes “necessary adjustments” to make the business more efficient in providing customers speed to market, convenience and personalized experiences.
To further position the company for better performance, J.Crew is changing its leadership structure as well.
Michael J Nicholson, who is currently president, COO and CFO of J.Crew Group, will now also be responsible for the J.Crew brand, which includes planning and allocation, merchandising, marketing and design. Lisa Greenwald has been promoted from senior vice president of merchandising for Madewell to chief merchandising officer of the J.Crew brand, including men’s, women’s and kids. As previously announced, Somsack Sikhounmuong is J.Crew’s new chief design officer. Finally Libby Wadle, formerly the president of the J.Crew brand, has been named president of Madewell.
J.Crew is trying to crawl out of a hole all too familiar to other mall-based apparel chains. The company is facing eroding sales and a hefty debt load. In 2016, sales were down 6 percent year on year, while revenue slid by 3 percent for the same period.
At the end of last year J.Crew shuttered its bridal collection after having pioneered the no-fuss, accessible wedding party trend. Also, industry chatter had the company contemplating a sale of Madewell in a bid to get out from under approximately $1.5 million in debt.
More recently, J.Crew has been in a tug of war with its lenders over the company’s trademarks. The retailer sought to place 72 percent of its trademarks, including its brand name, into a separate subsidiary lenders can’t touch. On the other hand, lenders balked that the IP belongs to them dating back to 2011 when J.Crew was purchased by private equity firms TPG Capital LP and Leonard Green & Partners LP.
After a proposed debt exchange, Moody’s Investor Services downgraded the company, owing to its probability of defaulting.
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