There aren't many people picking on J. Crew (JCG) these days, are there?
Through the first nine months of 2007, J. Crew generated a staggering 13.8% EBIT as a percentage of Revenue, according to their most recent 10-Q statement.
Take a look at the financial performance by "channel":
|J. Crew Financial Performance Through Three Quarters|
|YTD 2007||YTD 2006||Change|
|Catalog Pages Circulated||-5%|
|Total Direct Channel||$251.4||$195.4||29%|
|Retail Store Sales||$654.2||$566.7||15%|
Notice that in spite of a 5% decrease in catalog pages circulated, e-commerce sales increased 44%. Here is what management had to say about catalog circulation:
"We continue to see a shift of Direct customers from catalog to the Internet. We evaluate the efficiency of our circulation strategies on a continuing basis and make adjustments as we deem appropriate."
Do you think the adjustments are working?
Based on all of the data I've analyzed over the past decade, I am convinced that most of the brands we manage have fat to cut in the print channel. We need to do a better job of evaluating each advertising channel as an investment.
Financially, we're told to diversify our investments if we want to protect our retirement income. Similarly, we need to do a better job of re-allocating our print investment into better-performing online advertising channels. Our measurement methodologies and belief systems prevent us from making necessary progress.