US fashion group J Crew has filed for bankruptcy protection, becoming the first big US retailer to be pushed over the edge by the coronavirus pandemic.
The private equity-backed company, known for its preppy styles, said on Monday that its parent Chinos Holdings had filed for Chapter 11 relief as the sector struggles to contend with the widespread store closures brought in to stem the spread of Covid-19.
As part of the restructuring process, J Crew said it had reached a deal with its lenders to convert $1.65bn worth of debt into equity. It also said it had secured commitments for a debtor-in-possession financing facility of $400m from its current lenders. It will retain its Madewell brand as part of the agreement.
“This agreement with our lenders represents a critical milestone in the ongoing process to transform our business with the goal of driving long-term, sustainable growth for J Crew and further enhancing Madewell’s growth momentum,” said Jan Singer, chief executive of the group.
J Crew had already been under pressure from its heavy debt load and had fallen out of favour with many American consumers after a series of design mis-steps in recent years. It also faced intense competition from lower-priced fast fashion retailers such as H&M and Zara. But the shock sent through the industry by the coronavirus pandemic proved to be the final straw.
Retailers in the US and around the world have been among the hardest hit by the pandemic, with much of the sector facing a historic crunch. Lockdowns across the US have forced the closure of hundreds of thousands of outlets and the National Retail Federation has suggested that $430bn in industry revenues could evaporate over the course of the second quarter.
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May 04, 2020 at 05:02PM
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Fashion group J Crew pushed into bankruptcy by coronavirus - Financial Times
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