It was supposed to be the biggest year to date for 17-year-old fashion brand Jenni Kayne.
Based on January and February sales, the L.A.-based company was projecting $60 million in revenue for the year, surpassing its original goal of $40 million. In 2019, it did $24 million. It was also set to open three new stores in the first half of the year, bringing the count to nine, and enter the furniture and beauty categories with the launch of new collections — the first Jenni Kayne-branded retreat, to coincide with the beauty launch, was set for May. In addition, it was in the letter-of-intent phase of raising outside capital for the first time (founder Jenni Kayne’s father had been the sole investor) and was on track to reach profitability ($1 million-$2 million in EBITDA) by year’s end.
“It certainly doesn’t feel as good as it did a few weeks ago, when we were cruising toward the huge year,” said Julia Hunter, CEO of Jenni Kayne. However, she said the company’s positioning in the market is working to its advantage; it’s always specialized on comfortable clothing and home decor meant to inspire women to “live well.” To keep the company afloat, her plan has been to laser-focus on the products that best fit the bill, including cozy sweaters, shearling slippers and alpaca blankets. To do so, she cut the number of styles sold on the company’s e-commerce site from 400 to 100.
Downsizing merchandise was just one bullet point in Hunter’s strategy to see the company through the current storm and not only onto solid ground, but also in the black. Other businesses in survival mode have adopted a similar process of streamlining down to skeleton companies: They’re cutting merchandise, slashing prices and cutting staff, particularly employees least equipped to pinch-hit.
With all of Jenni Kayne’s own stores closed (including its newest, in San Francisco, which opened two days before lockdown) and its one retail partner, Nordstrom, cancelling orders, the e-commerce site is the company’s sole sales channel. Regardless of employees’ responsibilities prior to the outbreak, all transitioned to support the e-commerce business, either by creating content by taking photos or posing as influencers, or by contributing to fulfillment. While the company’s warehouse was temporarily closed, Hunter and the company’s CFO, Anne Pak, shipped orders from their California homes.
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In the process, store managers were furloughed and store associates were laid off; the corporate office also saw cuts, going from 25 to 21 employees. Hunter said no additional staff cuts should be necessary, even in the worst-case scenario of stores remaining closed for the rest of the year.
“We’ve been calling our strategy for the team ‘back to basics.’ It’s really grassroots, and it’s all hands on deck,’ said Hunter. “Everyone is doing work 10 levels below where they were before all of this.”
Part of the e-commerce strategy is trying things in the name of providing shoppers with regular newness. Though the company typically restricts sales to temporary markdown at the end of each season, it ran a 20% off sitewide promotion in March. In April, it will start introducing its furniture pieces two at a time, deviating from the original plan of rolling out the full collection around fall. Plus it will upgrade its direct mail process from sending two postcard-style mailers per month (typically introducing new styles to existing customers) to sending a content-heavy “magazine” to engage an audience of prospective customers stuck at home.
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Originally set for May, the launch of beauty brand Oak by Jenni Kayne has been delayed until September.
So far, efforts are working. The company’s e-commerce sales for March were up 300% year-over-year, which covered losses from retail stores and kept the company on track for its original 2020 revenue aim of $40 million. Annual e-commerce revenue will need to reach $37 million, up from $12 million in 2019, to meet the goal.
Last year, Jenni Kayne’s sales were 97% DTC — it did about $1 million in sales through Nordstrom. This year, it was projecting $2 million-$3 million through Nordstrom.
“We pivoted from wholesale in the last couple of years, and I just feel grateful that we didn’t have a bunch of wholesale partners that would have impacted our P&L the way they have for other brands,” said Hunter.
Ashley Merrill, founder and CEO of Lunya, another California DTC brand in the high-end, sleepwear-cozy wear space, tells a similar story. Since March, she’s aimed to keep costs down by strictly selling the core products the brand is known for, which consistently sell well and are currently in demand. In addition, a “good portion” of the Lunya staff has been put on unpaid leave. Merrill declined to provide more details.
“The staff — the lean machine we have — is having to take on a lot of the work of their furloughed friends,” said Merrill, noting that she doesn’t anticipate needing to make further staff cuts. “Across the board, everyone has embraced a shallower, wider focus.”
With the temporary closure of Lunya’s three stores — in New York, Brooklyn and L.A. — all focus has moved to sales via e-commerce, where sales had been 85-90% of the business. The company’s warehouses and distribution centers, which are based in California, are operating with minimal delays.
Merrill said the pandemic and its impact on her business has made her reevaluate how much growth the company needs year-over-year. Though self-funded thus far, it’s been “a high-growth company building toward high-growth numbers year-over-year,” she said. She’s now taking a more balanced perspective on growth — one that prioritizes top-line growth but also stability, to ensure the company can ride ups and downs.
“There’s no playbook for this, but I do know that my job is to get the company through the storm, and the best way for me to help my employees is to make sure there are jobs for them to come back to.”