Tough Times Ahead for Chain Store Spinoffs

What: While the retail industry as a whole is taking a hit in today’s economy, it’s beginning to look like specialty chain stores spinoffs are faring especially poorly. Following in the steps of Abercrombie & Fitch’s Ruehl, which announced it was shutting down its stores last month, and Aeropostale’s rock-inspired spawn Jimmy’z, which closed in February, industry analysts are now questioning the fate of American Eagle’s Martin + Osa and J. Crew’s Madewell—which many believe may be the next chain store spinoffs to get the axe in the near future.

What They Say: “It’s hard enough for new brands to gain traction in a new environment let alone in the worst recession in decades,” said Todd Slater, an analyst with Lazard Capital Markets. “In downturns, many new initiatives are sidelined.”

What We Say: We’ve always loved American Eagle and J. Crew, but we can’t say the same about their spinoffs. Martin + Osa and Madewell never seemed to gain mainstream popularity, a fate we can’t help but blame on their higher-than-necessary prices. ($80 for a pair of jeans? Umm, no thanks.) So if shutting down unprofitable chain store spawns will help save their more frugally-priced parent stores from facing a similar fate, then we say good riddance.