THE owner of J.Crew has filed for Chapter 11 bankruptcy just months after the coronavirus outbreak hit the United States.
The preppy fashion retailer’s filing is the first big retail casualty of the pandemic — and more bankruptcies throughout the retail sector are expected in the coming weeks.
The filing in Virginia federal court included an agreement to eliminate an estimated $1.65billion in debt in exchange for giving up ownership to creditors, Reuters reported.
New York City, where J.Crew Group Inc. is located, went into lockdown shortly after the first person in the Big Apple tested positive for the virus.
Nearly 500 J.Crew, J.Crew Factory, and Madewell stores were forced to close.
The company said that operations at J.Crew will continue as the group restructures and that clothing will still be available for purchase online.
On Monday, the company added it anticipates J.Crew stories will reopen when it’s safe to do so.
“This agreement with our lenders represents a critical milestone in the ongoing process to transform our business,” Jan Singer, J.Crew’s chief executive, said in a statement, per The New York Times.
Expected to follow J.Crew’s footsteps are J.C. Penney and Neiman Marcus.
True Religion Apparel Inc., the popular jeans maker, filed for bankruptcy in April.
According to the most recent report from the Commerce Department, clothing store sales dropped 50.5 percent in March and has grown worse since.
More than 250,000 stores, including Macy’s, Nordstrom, and Nike, which sell non-essential merchandise have been closed since mid-March.
Hundreds of thousands of workers have been furloughed, while some stores like Walmart and Amazon are on hiring sprees to try to meet the demand of shoppers buying online.
Macy's announced they were temporarily suspending pay to 125,000 employees, including sales clerks and stock people, but would still allow them to collect health benefits.
In J.Crew’s last full year of operations, the retailer generated $2.5billion in sales — a 2 percent increase from the year before.
As of February 1, there were 193 J.Crew stores, 172 J.Crew Factory outlets, and 132 Madewell locations.
J.Crew had aimed to spin off its successful Madewell division as a public company and use the proceeds to pay down its debt.
The company said Monday that Madewell will remain part of J.Crew Group Inc.
Source: Read Full Article