What’s to be done about J Crew? The company that was riding high and even considering an IPO just a couple of years ago has looked to be in danger of turning into fashion’s biggest basket case. It even admitted yesterday that the goodwill attached to the name is now zero compared to $1bn-plus not so long ago.

It’s still selling a lot of product ($526.9m in Q3) and its younger, smaller Madewell brand is still on the up, even though its standout comp sales rises of a year ago are slowing. But the company’s problems are big, really big.

So much so the company said, as I mentioned just now, that there’s no goodwill attributable to the J Crew brand any more. Which means? Well, it’s the ‘goodwill’ or premium attached to the brand itself and it stood at $1.7bn in early 2011. That was cut to $1bn this March, $676m in the summer and now to nothing.

It doesn’t impact sales or profits, of course. It’s all about the premium a buyer would pay if J Crew was up for sale and it’s a reflection of how far the perception of the brand has sunk.

But CEO Millard Drexler is staying upbeat. Despite widespread pessimism in US retail over prospects for Holiday 2015, he said J Crew has seen “an encouraging response to our recent product and merchandising strategies. Our team is focused on having a successful Holiday season and we continue to execute on our plans to deliver improved performance over the longer term.”

“Successful Holiday season?” That’s very encouraging. It’s obviously encouraging enough to get Michael J Nicholson to leave Ann Inc and join as president, COO and CFO. His new job (from January 11) will be to lead J Crew’s finance, global supply chain, sourcing, IT, real estate, asset management and investment management functions. He reports into Drexler.

So just what are the problems he (and his new boss) are facing in his new role? To put in bluntly, they need to make people want J Crew again. Getting people through the doors (or onto the website) is key. They also need to solve the problem of former customers who have moved elsewhere as they grew up and earned more money. But not enough new, younger customers are prepared to buy into an offer that they see as too expensive.

And even when the product is marked down, that lack of goodwill kicks in and the product just isn’t seen as a must-have.

Will new J Crew creative director Somsack Sikhmounmuong be able to change that? We’ll have to wait until next year to answer that question.

Q3 Need to Know

• Total Q3 company revenues fell 6% to$619.4m. Comp sales fell 11% following a fall of 2% a year ago.
• J Crew sales fell 9% to$526.9m and comps fell 12% after a 3% fall a year ago.
• Madewell sales rose 14% to$78.7m as it opened new stores but comps were up only 1%, after a 13% rise a year ago.
• The gross margin was 38.6% compared to 40.2% this time last year.
• The operating loss was$808.5m, bigger than the year-ago loss of $636.3m. Both this year and last year reflect the impact of pre-tax, non-cash impairment charges of $845.9m and $684m, respectively.
• The net loss was$759.7m compared to $607.8m last time.