J.Crew becomes the first US major retailer to file for bankruptcy amid coronavirus pandemic
- The J.Crew Group Inc. filed for bankruptcy in a Virginia federal court on Monday
- It is the first big retailer to fail during the pandemic and be pushed to the brink by widespread store closures
- Operations at J.Crew will continue throughout a restructuring and clothing will still be available to purchase online
- The coronavirus outbreak forced the company to temporarily close its nearly 500 J. Crew, J. Crew factory and Madewell stores across the country
- More bankruptcies across the retail sector are expected in coming weeks with J.C. Penney and Neiman Marcus expected to follow J.Crew
- Here’s how to help people impacted by Covid-19
J.Crew is the first major retailer in the United States to file for bankruptcy amid the coronavirus pandemic.
The J.Crew Group Inc. filed for bankruptcy on Monday in a Virginia federal court with an agreement to eliminate its roughly $1.65 billion of debt in exchange for ceding ownership to creditors.
It is the first big retailer to fail during the pandemic and be pushed to the brink by widespread store closures.
More bankruptcies across the retail sector are expected in coming weeks with J.C. Penney and Neiman Marcus expected to follow J.Crew.
The J.Crew Group Inc. filed for bankruptcy on Monday in a Virginia federal court with an agreement to eliminate its roughly $1.65 billion of debt in exchange for ceding ownership to creditors
Operations at J.Crew will continue throughout a restructuring and clothing will still be available to purchase online.
In addition to cancelling debt, J. Crew plans to close stores, though the final number it plans to shutter has not yet been determined, a person familiar with the matter said.
The coronavirus outbreak forced the company to temporarily close its nearly 500 J. Crew, J. Crew factory and Madewell stores across the country.
The company said on Monday that it anticipates its stores will reopen when it’s safe to do so.
Anchorage Capital Group, Blackstone Group Inc’s GSO Capital Partners and Davidson Kempner Capital Management hold significant portions of J. Crew’s senior debt and are in line to take control of the company.
They are also providing about $400 million of fresh financing to aid J. Crew’s operations, while it navigates Chapter 11 bankruptcy proceedings.
In its last full year of operations, J.Crew generated $2.5 billion in sales, a 2% increase from the year before.
J.Crew had aimed to spin off its successful Madewell division as a public company and use the proceeds to pay down its debt but the company said on Monday that Madewell will remain part of J.Crew Group Inc.
Operations at J.Crew will continue throughout a restructuring and clothing will still be available to purchase online. The coronavirus outbreak forced the company to temporarily close its nearly 500 J. Crew, J. Crew factory and Madewell stores across the country
Before the pandemic, J. Crew was already struggling along with other traditional brick-and-mortar retailers to compete amid a consumer shift to online shopping.
It also suffered after a strategic misstep of raising prices that turned off some shoppers.
Retail veteran Mickey Drexler led J.Crew for more than a decade when it become a coveted fashion brand but the chain appeared to lose its way at some point.
Talks in 2014 to sell J. Crew to Japan’s Fast Retailing Co, the owner of the Uniqlo apparel chain, fell apart.
Drexler at one point conceded he misjudged how technological developments would alter the retail landscape.
He stepped aside as J. Crew’s chief executive in 2017 and last year relinquished his seat as board chairman.
There are a number of retail chains that were already teetering at the start of the year, but the pandemic is wreaking havoc equally across the entire sector.
J.Crew is not the first to seek protection during the coronavirus outbreak and no one expects it to be the last.
J.C. Penney and Neiman Marcus are expected to follow J.Crew. Jeans maker True Religion Apparel Inc. filed for bankruptcy protection last month.
Clothing store sales plummeted 50.5% in March, according to the latest Commerce Department report, and it has grown worse since.