Analysts' Perspective - April 2003

— April 01, 2003

"J.Crew is exposed to extreme forms of competition in which very similar styles and prices are available through the same types of channels. Drexler is going to be doing the same thing he did at Gap Inc., and that will be marketing and branding. It is not clear how he can make a difference at J.Crew, a brand that suffers from some of the same stuffy conservatism that stifled Gap Inc."

"Drexler will strengthen J.Crew's brand identity. Along with a more consistent merchandising message, I would expect stronger advertising to support branding efforts. Along with these branding efforts, J.Crew will need to spend more than the traditional 2 percent of revenue on IT investments to catch up with their more IT-savvy competitors."

"The upscale urban casual niche faces a market transformation. The acute challenge for this market segment is creating clarity around both the specific customers the retailer hopes to delight and the innovative products and services the retailer can offer those customers. Operational effectiveness is the price of entry to be a successful retailer in today's competitive market. Achieving that provides a company with the cash flow to invest in creating the lifestyle experiences - products, services, image - their customer demands and is looking to buy. If J.Crew can become operationally effective, develop a laser focus on the customers they want to serve, and be truly innovative in what they offer those customers, they can win in the upscale urban casual niche."


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