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J. Crew Chain Creates ‘Mercantile’ Brand Ahead of Possible IPO

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May 2 (Bloomberg) -- J. Crew Group Inc., the retail chain that’s said to be planning an initial public offering for later this year, has created a brand called “J. Crew Mercantile,” potentially giving it a fresh store concept to boost sales.

The company filed an application on Nov. 25 to trademark the phrase for selling clothing and accessories, both online and in retail locations, according to a filing with the U.S. Patent and Trademark Office. J. Crew plans to use the name to create a chain for budget shoppers, the Wall Street Journal reported yesterday, citing people familiar with the situation.

Margot Fooshee, a spokeswoman for the New York-based company, didn’t respond to requests for comment.

J. Crew is seeking new sources of growth ahead of a possible IPO. The company, which was acquired by private-equity firms TPG Capital and Leonard Green & Partners LP more than three years ago, could fetch a valuation of as much as $5 billion, according to a person familiar with the situation.

The chain has been working to recover from a cutthroat holiday season, when rivals relied on deep discounts to attract shoppers. Net income tumbled to $5.92 million in J. Crew’s fourth quarter, down from $10.2 million a year earlier. Still, revenue grew almost 7 percent to $686.2 million in the period, which ended Feb. 1.

With J. Crew Mercantile, the chain will offer merchandise and prices that are similar to its J. Crew Factory outlet selection, according to the Journal. The company has been scouting locations for J. Crew Mercantile stores, the newspaper reported.

Pending Application

The trademark application, meanwhile, is still pending. On March 7, the agency sent a notice to J. Crew seeking additional information on the types of goods that might be covered by the trademark.

In addition to the IPO deliberations, J. Crew also held early-stage talks with Japan’s Fast Retailing Co. about a sale of the chain, people familiar with the matter said in February. Fast Retailing, Asia’s biggest clothing retailer, owns the Uniqlo chain.

Pursuing an IPO would mean following in the footsteps of other private-equity backed retailers. Burlington Stores Inc., which is backed by Bain Capital LLC, is up 61 percent since its October debut. And Vince Holding Corp., the apparel company backed by Sun Capital Partners Inc., has gained 34 percent since its November IPO.

To contact the reporter on this story: Lindsey Rupp in New York at lrupp2@bloomberg.net

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net Ben Livesey

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