UPDATE: According to reports from The Wall Street Journal, merger discussions between J. Crew Group Inc. and Fast Retailing have fallen through. People familiar with the situation indicated that news of the deal going public may have been the reason Fast Retailing walked away from the discussion with the J. Crew management team and the company’s private-equity owners. Now that the deal has fallen through, The Wall Street Journal noted that it is “more likely that J. Crew’s owners will seek to take the company public.”
Below is our initial coverage of the news, published on March 6, 2014.
The fashion industry is buzzing about Fast Retailing’s potential acquisition of J. Crew Group Inc., which includes J. Crew, crewcuts and Madewell brands.
However, J. Crew’s current price tag of $5 billion seems to be stalling movement toward finalizing a deal. J. Crew Group Inc. is a private company owned by TPG Capital LP and Leonard Green & Partners LP.
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While valuation is high, J. Crew would fit nicely in Fast Retailing’s assortment of brands should the deal be finalized.
Fast Retailing, the parent company of UNIQLO, has experienced rapid growth, largely due to the retailer’s aggressive expansion in the U.S. In the fall of 2013 alone, UNIQLO opened 10 new stores in California, Connecticut, New Jersey and New York. The retailer has already announced plans to open four more locations during 2014.
UNIQLO was created to offer affordable, yet high-quality basics, however, Fast Retailing’s other brands, Theory and J BRAND, offer more luxurious products with a higher price point. J. Crew has its fair share of pricey goods, but the brand is more accessible to a wider variety of consumers.
But the J. Crew acquisition could help Fast Retailing expand more rapidly in the U.S. market, a goal outlined frequently by the company’s Founder, President and CEO Tadashi Yanai.
As of February 2014, J. Crew Group Inc. operates 330 retail stores, including 257 J. Crew stores, eight crewcuts locations and 65 Madewell stores. The company also has seen ongoing growth across the entire business, increasing revenues by 7% in Q4 2013 to $686 million, and revenues for the 2013 fiscal year jumping 9% to $2.4 billion. In addition to already opening a flagship in London, J. Crew plans to open several more stores in Canada and Asia during 2014. This, inevitably, will power up the Fast Retailing brand even further should the acquisition take place.
Despite UNIQLO being lumped into the fast fashion category, which includes the likes of Zara and H&M, the company has strong principles that align more with luxury brands. The retailer’s extensive focus on creating quality, classic products especially meshes with values established by J. Crew.
“We’re about proving the fashion of classic looks,” said Lawrence Meyer, CEO of UNIQLO USA, in an interview with Retail TouchPoints. “I don’t consider us a fast fashion company, I consider us a provider of quality fashion and quality basics at a great value.”
See the Retail TouchPoints StoreTour with Lawrence Meyer, CEO of UNIQLO USA, to learn more about the brand:
