J.Crew Announces Layoffs & New Women’s Designer

J.Crew Group Inc. announced it was laying off 175 people in its corporate office today. The news comes on the heels of a disappointing first quarter and increasing pressure on the company’s womenswear business.

Reports surfaced earlier today and were confirmed in an evening press release that the company was laying off up to 10 percent of its corporate staff and making major design-division changes. Somsack Sikhounmuong will take over the J.Crew brand women’s line immediately, replacing Tom Mora. Mora is leaving the company.

Sikhounmuong previously served as design chief of Madewell, which has been doing much better than the recently struggling J.Crew brand. He will report to Jenna Lyons, J.Crew’s executive creative director and president.

Joyce Lee has been named head of women’s design for Madewell. She will report to Jenna Lyons as well.

During the first quarter, the company reported a net loss of $462.4 million, versus a net loss of $30.1 million in last year’s first quarter. Total revenue slipped to $581.8 million, compared with the year-ago period’s $592 million, and J.Crew’s sales fell, while Madewell’s grew in the quarter.

“We are making meaningful and strategic changes across our organization to better position us for future growth.  While many of these decisions were difficult, they are necessary,” said J.Crew chairman and CEO Mickey Drexler. “With Somsack in his new role, we will continue to focus on making critical improvements to our J.Crew women’s assortment, including fit, design aesthetic and styling. We know what needs to be done, and while many of these initiatives take time, we have a committed team in place to make it happen.”

In last week’s conference call, Drexler conceded that the company has made missteps over the past several quarters. From underestimating orders for the Tippi cardigan to consumer complaints about lowered quality in the brand’s ballet flats, the report wasn’t positive.

“We are, needless to say, clearly disappointed with the results,” said Drexler during the call. “It is our job, as always, to focus on what we can control in the business. We recognize there is work to be done, and we’re on it. As we all know, the retail apparel industry — and particularly women’s — has been challenging.”

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