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Jim thank you so much for joining us two weeks ago you relaunch to the j.crew brand at what sort of response have you had from customers are you seeing increased traffic higher sales we're excited about the relaunch we're definitely seeing an increase in new customers as well. As reactivated customers so people that have left the brand and are coming back to j.crew and are they spending as much as you would like they are it's it's it's an exciting time we of course don't announce our sales. Or earnings until the end of end of the quarter but you're happy so far yes the relaunch focuses a. Lot on diversity and inclusivity a lot of that relates to expanded sizing and how strategically important is the plus-size market for you now something that perhaps we've neglected a little well it represents. Half of American. Women and it's such a huge opportunity for an iconic American brand to really represent the diversity of America you've. Also reduced prices in a number of occasions and how is that affecting margins for you you know we have to play in in that arena in order to keep acquiring new customers you have to have opening price points that our. Gateway products to the brand and so it's very important and it's not just about the margin of the item it's about the long-term value of that customer so you you it's a. Case of bringing people in with perhaps something that they see is more affordable in the hope that they might. Spend more later exactly and you're seeing that already yes some of the changes that you've made with j.crew and seem to make j.crew look quite similar to its sister brand made well there are some commentators out there who have said perhaps it might be become quite difficult to distinguish between the two how do you maintain that distinct distinction. Is that important for you it's very important to maintain distinction between the brands I think they're quite distinct made well is is a younger brand with a tomboy edge to it and a very different fit j.crew is definitely much prep ear you'll keep it you're maintaining the preppy nature absolutely the preppy nature is there and then we're also adding. Other aesthetic elements but it wouldn't do the portfolio any good to cannibalize itself and I'm managing a portfolio of brands do you expect to add any other additional brands to that portfolio yes over time we we see ourselves as having more than two brands in fact we'll be announcing one new. Brand this year can you tell us any more about that. New brand is it aimed at women men is the name dare children what can you tell us about it I'll say that it is aimed at women and it's younger than any of our existing brands and. Any other further information in that will it be something that's in stores standalone stores online nope no more information we can expect it before the. End of the year yes part of the relaunch that we were just talking about and has the this new change in advertising a way of appealing to more people an idea of sort of bringing more people back into j.crew are you concerned at all. In trying to appeal to everybody you might actually not appeal to anybody in the end no you know when I when I started I received so many emails from customers saying I loved j.crew but I've grown out of the brand meaning physically it doesn't fit me. Anymore and we are now receiving so many comments via social media of people who are so happy to be able to shop the brand again so inclusivity isn't just about trying to be everything to everybody it's about in whatever you're. Doing including as many people as possible in fact we received a comment on Instagram from a woman who said thank you so much for showing the extended sizes please keep doing it it helps me a lot you've talked there a lot about engagement through social media that was another. Thing that we saw with the relaunch is change in marketing strategy or a shift really at a more digital mark saying. Have you also relaunched what I guess I would call the back end of the business as well how much have supply changed change. How much is inventory management changed of j.crew so that's really the work that's been happening. Over the past year so a lot of it has changed we have organized the business to be able to be more responsive to the customer needs essentially a more customer centric back-end process and let's talk a little. Bit about sales. The quarter just gone saw positive comparative sales for the GQ brand for the first time in about four years you describe that as a watershed moment what are. You expecting in the coming quarters and in the next year with regard to sales you know it's. The beginning of our relaunch and we still have a ways to go but I expect that the j.crew brand should be on a path of growth for for the. Future so it should continue the wider j.crew j.crew group and this sales growth there has largely been fuelled by made well in recent times are you concerned that it might actually end up eclipsing the parent brand no I really think that's the point of a portfolio group if. Made well is to be a bigger brand than j.crew then great we have to go with what the customers want you keep stressing the portfolio of brands and we're excited to hear there's good to be a new one that'll launch very soon and there are. A number of people though who look at made well they see your comments that it could become a billion-dollar business they see the debt on the balance sheet for j.crew group and they think made well could be very helpful if it was spun out on its own is that something that you've contemplated that you. Are contemplating I think that there's a lot of advantage to leveraging the back of house across multiple brands and I don't think that it is it. Would benefit us to split the brand's up and that's that's not a current strategy made wealth stays within the j.crew group and you've launched Madewell men's as well recently how is that how does that sort of. Help that strategy of the portfolio well so really you can think of Madewell men's. As another brand launch because it could be its own concepts we we won't put Madewell men's product in an existing store because they're smaller stores and they're geared towards women so made while. Men's creates an entirely new opportunity for freestanding stores very expanded presence on website wholesale etc and what is the response being to make romance it's been great you know it's small because it's only online and in Nordstrom's at the moment but. It's it's been positive enough that I can tell you that we're very seriously looking at expansion opportunities does that mean physical stores it could absolutely and you've also recently partnered with Amazon in many ways a competitor and you're selling the. J.crew mercantile brand on its marketing play marketplace and why was that the right move for you to sell on what could be considered a competitor so I really don't believe that we compete. With Amazon on the main j.crew line I see the products that are being sold on Amazon as. More value oriented and mercantile. Really is a new brand as well that's geared towards a younger customers still with the preppy spirit and and a greater value and we felt like Amazon was the perfect home to launch that new brand but you're not worried then about cannibalization no not at all no are you concerned at all about how they might use your sales. Data I think we have a strong partnership. With Amazon and I believe that we will maximize the sales for Jake from mercantile by growing Jake or mercantile. Do you envisage further j.crew group brands being Saldana. Not at the moment not at the moment not in the near future mm-hmm you also developed another a number of other third-party relationships more recently obviously Nordstrom there to port a ASOS how big a part of the business do you see wholesale becoming a j.crew. So in the short-term wholesale has been a huge global opportunity for us we have our wonderful relationship in the US with Nordstrom but we did not have relationships. Across the globe so recently we. Launched all across Europe and all of the major department stores and in South America as well and we're exploring opportunities in Asia now and how does the rest of the world take American practice so far it's. You know it's really only been a couple of weeks but so far we're hearing positive things from our partners just shifting gears slightly and I want to talk a little bit about tariffs and the trade war it's been a big topic of conversation for us here at Bloomberg a new round of 10% tariffs on another 200 billion. Dollars worth of Chinese goods went into effect Monday how did that does that impact j.crew it impacts us you know part of our products our accessories our handbags are impacted by the recent tariffs but you know it's it's our job to. Make sure that we have a highly diversified sourcing strategy we've experienced changes in the way that we do business. Before when we had quota and then we didn't have quota and it's important to make sure that you're not overly. Dependent on one country so would you consider yourself then to be well positioned say if apparel gets included in the next round of tariffs should there be another round I that we are a. Highly diversified company when it comes to our sourcing how much of your product comes from China I'd rather not say the exact amount but I can tell you that it's less than a third and are you officially already moving things away from them or do you. Feel you already diversified enough we're always looking at opportunities to to strengthen our position and given what's happening I think we will. Probably become more aggressive on that front at the moment do you feel you're going to have to pass on costs to the consumer not at the moment would that change in January if the tariffs rise to 25 percent I think that we can't pass these increases on to the consumer we have to figure out. A way to manage our internal costs to absorb it you would absorb it in a different way yeah changing to look at the US economy which it's going through a period of growth at the moment that's something that the president is obviously very happy to tout whenever. He can consumer confidence is high are you seeing that among your consumers are people spending more are they shopping more often you know the the consumer confidence thing is always hard to measure because the performance at every retailer is so different we we know that it's up from from what we. Read but in terms of our own performance where we we look at it in a much more internal way and we measure our success against our own efforts versus general broader economic swings the flipside obviously though of a good economy is. That labor Freight cargo cost those tend to go up and they are rising are you having to think about that how is j.crew navigating that at the moment that's also always part of an ongoing sourcing strategy is how you're managing. Tariffs how you're managing your sourcing costs and. How you figure out how to leverage more of your business to lower those costs so one of the things that's been a big opportunity at j.crew is to leverage our businesses meaning consolidating them in a. Way that lowers our costs and what about when it comes to associates are you finally getting more difficult to to hire you having to offer more incentives at the moment no you know people love j.crew and they want to work at j.crew and when we have. Open jobs were flooded with applications so you're not worried about a tightening labor market yeah let's turn to the future of j.crew and you're obviously. Trying to implement a long term strategy at Jake who you've been CEO now for over a year that may take some time to pay off j.crew is. Also owned by. Private equity and they don't they're not often that that patient they're typically more focused on some near-term cash generation how much of a challenge is it to manage those. Competing those competing signs you know I have to say that the private equity owners of j.crew have been supportive of everything that I've wanted to do so I've been able to implement my full strategy and and and build a strong team and we have. Plenty of runway our debt isn't due until 2021 and we don't. Anticipate that being an issue private equity though is usually looking for some sort of exit absolutely that's something can you tell us something about what that might be in the near term future you've been rumors before about. Going public is that part of Jerry's evolution I would say I mean a transaction is that the end state thing that we're striving for but it could be anything it could be an acquisition by another company it could be. An IPO or it could even be a transfer to another private company is there anything that you're pursuing actively at the moment yeah nothing at the moment and your private equity owners are happy yes you mentioned and obviously j-cruise debt it's no secret that there is a reasonable amount. Of debt on j-cruise balance sheet other than increased sales where else can you attempt to realize value you've said you're not interested in spinning off made well what what are you looking at. There well you know there's there's the top line in the bottom line so along with the sales opportunity have been enormous opportunities to to leverage our approach to cost and reduce costs and and obviously the. The cost of our goods is one of the largest expenses that our retailer has so we've been achieving a large savings there you've been successful in that effort we have and you're happy with it yes and finally have you ever have you heard of the expression and to. Be J crude this is something that is happening in debt markets I understand Lent when lenders don't like a debt deal they say no pmj crude referencing the shuffling of assets that you mentioned earlier and how do you feel about. Your brand being invoked in that way do you think it's fair you know that transaction happened before I started. I don't know if it's if it's fair or not fair all I know is that when I started you're a little. Over a year ago I think our. Debt was trading around 70 cents and now I think it's trading at close to 70 cents on the dollar and now I think it's trading. At almost a dollar on the dollar so I think that are the people that hold our debt are very happy so using your performance perhaps in perhaps shows how well you're doing yeah wonderful and I am very happy with that unless there. Is anything else that you think we should cover that we haven't never got let's see we talked. Yeah we what did we talk about we talked about Amazon we talked about made well mends we talked about the new brand we talked about inclusivity and sales and tax and we covered everything yes and you're not there's nothing else you'll tell me about this new brand other than it's aimed at. A younger female. Audience No thank you very much we really appreciate it.


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