J. Crew is the first major retailer to fall victim to the coronavirus pandemic, and files for chapter 11 bankruptcy. The store which is known for it’s preppy style clothing made an announcement on Monday May 4th. The store’s sister brand Madewell will still continue to stay in business during the pandemic.
In their statement, J. Crew explained that its e-commerce business which contributes more than half of the company’s sales will continue to operate. It also plans to reopen stores as soon as stay-at-home orders and other health restrictions related to COVID-19 are lifted.
J. Crew, which was struggling before the pandemic, happened to keep up with the consumer’s tastes. The clothing brand was also dealing with a severe debt from its $3 billion leveraged buyout in 2011 by private equity firms TPG Capital and Leonard Green and Partners, which is the main cause of their financial difficulties.
The misconception is that J. Crew is closing down, but the store is simply taking time and reorganizing their debts to ultimately achieve a fresh start financially. The lenders plan on turning 1.6 billion of that debt into equity.
J. Crew is the first, but won’t be the last store to be affected by this pandemic.