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The Old J.Crew Is Back

More "core heritage," less "high-end fashion."

Posted on August 27, 2015, at 6:27 p.m. ET

Fernanda Calfat / Getty Images

J.Crew just reported another terrible quarter — but CEO Mickey Drexler promises that the preppy brand that customers have been pining for is back.

"We know what happened to create tough business, and we know what's happening to make it better," Drexler said during an earnings call Thursday, on which he repeatedly referenced the return of J.Crew's "heritage" items.

J.Crew is refocusing on customers' classic favorites and devoting fewer resources to marketing high-ticket items. "Our core heritage businesses are taking up a bigger percent of our investments, and our high-end fashion, a lesser percent of investment, and lesser percent of perception," he said.

In other words: more items like $80 Tippi sweaters, less in the way of $950 palm tree sequin lace dresses.

J.Crew has seen sales tumble this year amid intense criticism from its once-loyal fan base for drifting away from its roots. Women have lamented the chain's steep prices, inconsistent fits, and new styles that don't fly in most 9-to-5 office jobs in publications from the Wall Street Journal to The Hairpin to the Washington Post.

"I think you gotta go into the stores and you gotta look at what there is," Drexler said on Thursday's call. "I got an email this morning, I get them every day, and emails cannot be taken to the bank, I understand that, but this woman, who was a regular customer, says, 'Hallelujah for the leather, the prints, the cashmere basics and the quality I missed.' We're getting a lot of feedback like that on the Style Guide and online."

The changes came too late to reverse declining sales. The results for the three months ended Aug. 1 were worse than the first quarter. J.Crew also recently eliminated 175 jobs, mostly from its New York headquarters, and replaced the head of women's design for the J.Crew brand.

J.Crew brand sales tumbled 10% in the second quarter and 13% on a comparable basis (which does not include sales from new stores).

The company's newer Madewell brand, on the other hand, is gaining momentum. The brand's sales rose 22% overall and 8% on a comparable basis. While Madewell continues to be a shining star for the company — its sales rose 33% in the first quarter — it only accounted for one-tenth of the company's $2.6 billion in sales last year.

Drexler acknowledged in June that J.Crew overemphasized its high-priced "Collection" business at the expense of its classic, everyday items, and that it made tops too "oversized and boxy." He also pointed to unpredictable shopper traffic and "rampant discounting" within the retail industry as additional challenges for the company.

While it's not exactly discounting, J.Crew has plans to open nine stores this year under its new J.Crew Mercantile name. That chain will sell J.Crew Factory's cheaper, made-for-outlet goods in traditional malls and shopping centers, hopefully without cannibalizing J.Crew's full-price business, according to an internal memo sent to BuzzFeed News last month.

"We've had lots of demand for J.Crew-branded goods at other price points," Drexler said today. "Essentially, it's a way for us to take a business that's value J.Crew and put it in areas where J.Crew retail would not have been successful."

A BuzzFeed News investigation, in partnership with the International Consortium of Investigative Journalists, based on thousands of documents the government didn't want you to see.