Madewell could file for the IPO and part with J. Crew

J.Crew had some difficult years. Sales declined, stores closed and after an unsuccessful brand change to cheaper and more trendy clothing that did not satisfy the company's buyers or board of directors, its new CEO resigned.

Its sister brand Madewell had a completely opposite trajectory. Sales soared, to the point that J. Crew even began to integrate Madewell stores into his own existing stores to attract customers. The company recently named its own CEO to lead Madewell, instead of relying on J. Crew's leadership.

Now, J. Crew could decide to create Madewell as a clean society.

In a statement released Thursday, J.Crew Group's parent company announced its intention to float Madewell. By separating its better-performing brand from its distressed brand, the company could use the IPO money to pay off J. Crew's debt of nearly $ 2 billion.

"We believe that a potential IPO of Madewell, which has experienced another record year in 2018, could generate significant value and generate significant revenue that would strengthen our balance sheet," said Michael Nicholson, Acting CEO of the society.

Vox contacted J.Crew for a comment and did not immediately receive an answer.

J.Crew would not be the only company to be outperformed by another brand in its parent company's portfolio. Earlier this year, Gap announced its split in two, turning Old Navy into a full-fledged company. (Gap and other brands like Athleta and Banana Republic will remain a different company, currently called NewCo.)

Like J. Crew, the Gap brand has had to deal with a decline in its profits because of customer disinterest and the high cost of operating from too many stores. Meanwhile, Old Navy has become the strongest brand in Gap Inc.'s portfolio because of its focus on targeting buyers on a budget, according to CNBC.

Madewell has also been successful in focusing on a very specific type of customer – the type who loves denim, boho dresses and minimalist shoes. Her catalog of "tomboyish mannequins, Françoise Hardy-closet feeling", as her style was aptly described by Fashionista, has attracted the attention (and wallets) of buyers for years. As former head designer Somsack Sikhounmuong told Racked in 2015, Madewell makes "the kind of things you will keep and wear as you get older".

Madewell, of course, is much smaller than J. Crew. It has 120 stores and is also sold to Nordstrom. (J.Crew has more than 500 stores, though it quietly closes its stores.) But Madewell is catching up on sales and could even outperform J.Crew. According to the New York Times, Madewell made $ 529 million last year, while J. Crew had $ 1.8 billion in sales last year – in a downward trend in sales , with $ 2.2 billion four years earlier.

J Crew

As Madewell looks at its success by launching its first men's clothing line in September, J. Crew has spent years battling an existential crisis. The company was once considered a clbadic American brand, but it isolated many buyers when the former creative director, Jenna Lyons, took a more trendy (and more upscale) approach. In 2017, Mickey Drexler, former CEO of J. Crew, admitted to the Wall Street Journal that "our attitude had become a little too elitist. We gave the impression of being a higher priced company than we were – in our catalog, online and in our general presentation. … very big mistake. "

In his most recent stimulus attempt, J. Crew attempted to focus less on preparation than on lower prices. But sales continue to decline and the repayment term of its debt is slowly approaching. Filming off Madewell could be his only viable option. As critics have pointed out in the past, saving J. Crew could be too difficult at this point.

That may be good news for Madewell fans: the fact that the beloved brand can turn into a full-fledged company, instead of being overshadowed by an indebted sister brand, means that Madewell could get more concentration and attention. Bring the denim guy and the clumsy mules.

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