J.Crew Discontinues Budget Line, Amazon Deal in Question

J.Crew will discontinue its budget clothing line Mercantile a little less than three months after the company announced it was opening a dedicated storefront for the brand on Amazon.com. A spokesperson for J. Crew confirmed the decision to CNBC. The company informed employees of the news in an internal memo Thursday, which was seen by The Wall Street Journal. The end of the Mercantile line raises questions about J.Crew's deal with Amazon, which has been selling the budget line since September. J.Crew originally resisted selling its products through Amazon to maintain control of pricing and marketing. The Amazon deal was made under former CEO James Brett, who left the company earlier this month after strategic differences with company chairman Mickey Drexler.

Total Retail's Take: This move makes sense now that Brett is no longer with J.Crew. It was Brett's decision to sell product on Amazon as a way to generate sales and reach a larger audience, something that apparently didn't sit well with Drexler, who believed selling on the online marketplace would tarnish the J.Crew brand and weaken its customer relationships. In the end, Drexler won out. What's clear going forward is that J.Crew has a laser-like focus on returning the brand to profitability, with cost cutting measures — e.g., discontinuing the Mercantile line — to be expected.