Madewell has come a long way since Mickey Drexler bought the name of the decades-old brand in 2003 and later agreed to lease it to J.Crew, where he was CEO, for $1 a year. J.Crew ultimately absorbed the company, launched it as a standalone label selling high-quality denim, and watched sales take off as Madewell became a destination for young, cool women.
Now Madewell is set to spin off into a separate entity again, this time with an IPO, marking a milestone in a streak of impressive growth despite ongoing struggles at J.Crew and in the blue-jeans business more broadly. As women start buying up denim again, the timing may be opportune for Madewell, which sees its jeans as a competitive advantage.
Jeans made up 29% of Madewell’s sales last year, according to its IPO filing, and remain among its fastest-growing categories of products. (What it calls “everything you wear with jeans,” which includes t-shirts, jackets, and most of the other products it sells, collectively made up 52% of sales.) Much of that success has come from Madewell’s attention to details like fabrics, washes, and fit.
Not by coincidence, jeans are one of the keys to Madewell’s strong customer loyalty—60% of active customers are in its membership program. Madewell pointed out that denim purchasers tend to stick with the brand and have a higher lifetime value.
Jeans also proved key to Madewell’s growth when other denim makers came under intense pressure from the stretchy comfort and lifestyle signaling of yoga pants. In 2017, imports of women’s elastic-knit pants overtook those of blue jeans for the first time. At this point, athleisure has matured and fashion is shifting. With denim sales returning to growth, and US imports of women’s blue jeans once again topping those of elastic-knit pants, the conditions look even more favorable for Madewell’s denim-clad ambitions.
The brand said it aims to increase market share among women’s denim between $100 and $150, which encompasses most of its jeans, while extending its offering on both the less and more expensive sides of that range. Its $75 “Roadtripper” jean, launched in 2017, has helped the company reach new customers, for example.
By continuing its push into new markets, Madewell thinks it can grow its denim sales alone to more than $500 million a year.
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