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J. Crew Eyes Hong Kong and Tokyo

The retailer is scouting locations for possible store launches next year.

HONG KONG — J. Crew is scouting locations in Hong Kong and Tokyo for possible store launches next year.

“Hong Kong is a world-class city, so my impression is we should be here,” said chief executive officer Millard “Mickey” Drexler, who is in Hong Kong for a day and a half before heading to Tokyo. “We’re looking; we’re visiting the local landlords. We’d like to open a store. Of course we’re new to the market, so we don’t know it that well right now,” he said.

Drexler acknowledged Hong Kong’s sky-high real estate prices make scouting difficult, but said he hasn’t gotten as far as negotiations with landlords yet.

“We’re not going to open up here unless it makes sense economically. It’s no fun owning a store that doesn’t pencil out. We’re not doing it just for marketing. Every store we open in the world, we will hopefully get a return on investment and if we think it’s out of line, I’d rather not spend our money that way,” he said.

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This isn’t the first time J. Crew has expanded overseas. At one time — before Drexler joined the company in 2003 — the company had 65 licensed J. Crew stores in Japan. It then pulled back and closed the stores.

“We didn’t pick the right partner and didn’t have the right goods either,” Drexler said of J. Crew’s first overseas foray. “It didn’t work out because we weren’t ready for it yet then and didn’t have good real estate.”

Drexler is taking a slower and more targeted approach for J. Crew this time around. He emphasized that the company is not in a hurry and is looking at the long-term.

“We have a lot of growth, we think, left in America and in Canada. And we’re just looking for natural extensions of our business. We’re not looking at too many places right now. It’s Hong Kong, perhaps Tokyo, and the U.K., and for the near-term that’s it,” he said. He didn’t rule out opening stores in Mainland China at some point but said it isn’t part of the plans now.

As a first step toward international expansion, J. Crew expanded its international shipping to 107 countries in March, up from 29 countries. Drexler said early response has been “really positive.” Hong Kong — one of the new shipping destinations — already ranks as one of the top five countries, while the U.K. is the number-one overseas shipping destination.

J. Crew also teamed up with Hong Kong-based retailer Lane Crawford to sell a limited collection of its apparel at three Lane Crawford stores — two in Hong Kong and one in Beijing — starting in early October.

“The relationship with Lane Crawford gives us an opportunity to learn while we’re looking [for store space],” Drexler said. He said he doesn’t expect the relationship with Lane Crawford to change if and when J. Crew opens its own standalone stores in Hong Kong.

“To me, fashion is a world language. It translates into almost every country in the world. With all the retailers that are successful, we will also be successful if we do it right,” he said.