J. Crew to Look at Continental Europe in Expansion DriveBilly Chan and Stephanie Wong
J. Crew Group Inc., the retail chain that is opening its first Asian stores this week, plans to expand its international push with outlets in continental Europe and will be scouting for locations in Paris.
The company plans to open stores in mostly capital cities worldwide to boost brand awareness, said Chief Executive Officer Millard “Mickey” Drexler. He will head to the French capital in a few weeks to look at some sites, Drexler said. The company currently has no presence in continental Europe.
J. Crew, whose customers include U.S. First Lady Michelle Obama, has been expanding overseas and the Hong Kong stores are part of its plan to open outlets abroad this year including one in London and about four in Canada after opening three in the U.K. in 2013. The store additions come amid slower pace of annual revenue growth for the retailer that draws almost all of its sales in the U.S.
“We are looking where we see the right environment, like Paris is obviously a great city to do business in,” Drexler said in an interview in Hong Kong today, ahead of tomorrow’s opening of its first two Asia locations in the Chinese city. “The ambition is to go slow and do it well with great integrity, and not do it quickly and lose the quality control that’s critically important to us.”
J. Crew, owned by TPG Capital and Leonard Green & Partners LP, is considering an initial public offering in the U.S. for later this year, according to people familiar with the matter. It held early-stage talks with Japan’s Uniqlo owner Fast Retailing Co. about a sale of the chain, people said in February.
The retailer, based in New York, has no immediate plans for an IPO or a sale as J. Crew is getting through the current “challenging period” in the apparel industry, said Drexler.
“Nothing is imminent and in the near future for us,” he said. The company would entertain “good offers,” Drexler said.
“Partners always like to see their return of investment, so down the road, we will entertain at some point, either selling or going public,” the executive said.
J. Crew reported in March net income fell 42 percent to $5.92 million in the fourth quarter ended February as it’s working to bounce back from an industry slump that hurt holiday sales and triggered a wave of discounting among rival retailers. Revenue growth in the 12 months ended February slowed to 9 percent from 20 percent in the year earlier, according to data compiled by Bloomberg.
Hong Kong Outlets
J. Crew, which has been selling items at Lane Crawford’s upscale department stores in Hong Kong and China, will open a women’s collection store and a men’s store in the Central financial district tomorrow.
The company is also exploring opportunities in China and it will depend on the performance of the Hong Kong stores, Drexler said. The executive had said previously J. Crew was looking for sites in Beijing and Shanghai.
J. Crew currently has no plan to tie-up with local companies in markets overseas as “it’s hard for us to want to have a partner running the business who we don’t really control,” Drexler said.
Founded in 1983, J. Crew operates 458 retail stores as of May 7, including 266 namesake outlets.