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Slow but steady: J.Crew plays it safe with Canadian expansion

The CEO once said there was no need to rush beyond the American market, but the dependable Canadian consumer has since convinced him to journey north.

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Once available only by catalogue, the fashions of iconic American brand, J.Crew, will soon be available to Canadian shoppers. The brand has announced that it will open its first store at Toronto’s Yorkdale Shopping Centre in August 2011.

But the clothing company wasn’t always so hot on the maple leaf. A year and a half ago, J.Crew’s CEO Millard “Mickey” Drexler was quoted as saying “I don’t know what the rush to be big is for, to be outside the United States,” and noted that growth outside the U.S. can distract from initiatives within the American marketplace. Indeed, Drexler has always focused on service and quality with J.Crew, careful not to over-extend the brand amid fierce competition from other garment purveyors, as has been a problem for the Gap (where Drexler was once CEO).

But the move into Canada isn’t necessarily a contradiction of that statement. Over the past 18 months, J.Crew has worked hard to position itself as a luxury brand that provides high-quality basics to the likes of celebrities and high-profile leaders like Michelle Obama. The company was also forced to realign itself after sales dropped when it strayed to far from its strength in quality classic clothing last year. Too-trendy items like short skirts and frilly tops were removed from shelves, and the brand recovered. J.Crew may be coming to Canada, but certainly not in a rush.

Other American brands have done well in Canada in the past year, offering a confidence boost to other retailers looking to cross over. One such company is Limitedbrands, the Ohio-based owner of Victoria’s Secret, Pink, Bath and Body Works and La Senza. Limitedbrands has shown solid growth and profitability over the past year and a lot of that has to do with their strong performance in the Canadian marketplace.

The annual report notes that “the company has seen great benefits from expanding into Canada. For 2010, net sales increased $238 million to $1.180 billion related to new Bath & Body Works stores in Canada, the introduction of Victoria’s Secret stores in Canada, revenue from our international wholesale and franchise business…”

Canada provides a safe place for American retailers to expand because the consumers and laws are so similar to those south of the border, and other retailers such as Target are also planning a big push into Canada in the coming months. Geographically, a push into Canada also makes sense. Many American retailers use Canada as a testing ground for their international growth strategies before pushing further abroad into Asia or Europe.