Over the last five years, J.Crew has steadily gained market share and a base of loyal followers who aspire to embody the effortlessly chic aesthetic of J.Crew’s President and Creative Director Jenna Lyons. She’s become a media darling, strutting her style on red carpets and even doing a guest stint on the HBO series Girls. It’s a rise emboldened by her boss, the fearless Mickey Drexler, J.Crew Chairman and CEO.

These two prominent fashion mavens took the helm of the company a decade ago, and soon started driving growth by introducing more high-end fashion and less classic apparel. Recently, though, the company’s income and cash on hand have fallen dramatically while inventory has risen. It’s an especially troubling situation considering the financial burden of J.Crew’s existing debt structure, with its high interest expense.

It all raises an important question: Can J.Crew’s risky fashion choices pay off long term? To find out, we undertook an in-depth research and analysis of the company while enrolled in the MBA program at NYU Stern School of Business. This 12-week process included everything from an audit of industry and analyst reports to quantitative online surveys and qualitative in-store visits.

Our research found much to admire at J.Crew. The company successfully moved up market with strong product design and in-store merchandising, driving gains in market share. But to maintain growth long-term, they’ll need to develop a plan for executive transition, identify growth opportunities, navigate fickle fashion trends, and leverage consumer analytics. These are all crucial hurdles to clear in order to turn the company’s cash situation in a more positive direction.

More specifically, we identified three key recommendations:

1. Use analytics to build a model for product development
To achieve sustainable growth and prepare for the day that its two leaders are no longer there, J.Crew must focus on uncovering the formula of Jenna and Mickey’s winning design choices. The company must apply an analytical approach to fashion, using data to optimize design and assortment.

In The New Science of Retailing, Marshall Fisher and Ananth Ramandescribe a scientific technique to determine which product attributes matter most to customers, such as size, cut, design, or color. They then use historical sales data as well as proposed new products to calculate the demand forecast for each item based on its attributes. The result of such analysis allows the retailer the ability to not only optimize its assortment of current products but also determine the attributes of new products it should stock.

Initially, this technique could be tested alongside Jenna and Mickey’s gut instincts for what will sell in order to validate the method. If the method proves a reliable augmentation to human decisions, J.Crew can use the method to help design collections and refine assortments moving forward. When Jenna leaves and/or Mickey retires, J.Crew will then have a method to overcome the design and merchandising gap left in their wake.

2. Continue to grow its core U.S. market
J.Crew should explore opportunities to use smart shopping technology and consumer analytics to optimize execution as well as maximize the potential of all J.Crew family brands. Regarding smart technology, J.Crew can utilize iBeacons to identify customers’ shopping patterns and then optimize store layout and merchandising accordingly.

Smart shopping technologies can also be used to deliver versioned coupons and hyper-targeted offers to those customers who are most likely to act on them, while omitting consumers who are not motivated by price promotions. The net result of this increased use of technology will be increased revenues and margins.

Regarding store mix, J.Crew currently has 265 J.Crew branded locations, 121 J.Crew Factory stores, and 65 Madewell stores. J.Crew Factory’s price points are more similar to those of Gap, suggesting that there may be room to expand this brand to compete with the larger mass-market specialty apparel retailers.

3. Grow internationally with discipline

Finally, we recommend that J.Crew pursue its most promising growth strategy: international expansion of the current format. Thus far, J.Crew has opened three stores in London and just opened two stores (one for men, one for women) in Hong Kong this year, but J.Crew has been burned by international expansion before. According to an article in The Wall Street Journal, the company opened 70 stores with a partner in Japan only to close them all a short time later.

Design and merchandising is so essential to J.Crew’s strategy that control of such elements is a critical component of success. When J.Crew does expand internationally, it is recommended to do so as a solo venture. J.Crew must also use pilot programs rather than trying to rapidly achieve full scale in other markets.

Currently, J.Crew is experimenting with only ecommerce in over 100 new countries to determine which ones, if any, are most viable for brick and mortar locations. This is the right approach and should be further combined with consumer research in each viable market before final decisions on brick and mortar locations are made. Once in market, J.Crew must take steps to develop loyal fans, as it has done in the U.S. market with fashion and customer service meaningful to the local market.

J.Crew has posted a strong performance over the past few years, but it’s recently hit a road bump. Does the retailer have the cash to continue repositioning itself as a fashion destination? Or does it need to play it safer to survive long term?