Pandemic Impacts J. Crew’s Recovery Plans
The parent company of the popular fashion retail chain J. Crew, J. Crew Group, has made the tough decision to file for Chapter 11 bankruptcy protection. The company had been struggling with a significant debt load accumulated following a buyout in 2011. Despite hopes for a turnaround in 2020, the COVID-19 pandemic thwarted those efforts as consumers shifted towards essential shopping only due to lockdown measures.
J. Crew and its subsidiary brand Madewell collectively operate approximately 321 retail locations and 170 factory stores. Before the pandemic hit, these retailers employed around 13,000 staff. However, with ongoing store closures, these numbers are subject to change.
A major portion of J. Crew Group’s $1.65 billion debt will be converted into equity as part of an agreement with its lenders. There are intentions to continue operating both J. Crew and Madewell post-bankruptcy, but closures of physical stores remain a real possibility depending on negotiations with landlords.
Michael Nicholson, President of Chinos Holdings, the parent company of J. Crew Group, mentioned, “If agreements with landlords cannot be reached, the company may have to terminate certain leases and close the associated stores.”
J. Crew’s filing marks one of the initial big-name retailers to seek Chapter 11 protection due to the pandemic. While temporary closures have posed challenges for businesses across various sectors, smaller chains face a greater risk of continued financial losses post-pandemic due to accumulated expenses during closures.
