J. Crew filed for bankruptcy protection on Monday (May 4), after posting a loss of $78.8 million during the last fiscal year. While the company posted a two percent sales increase last year, it was mostly fueled by J. Crew's other brand, Madewell. Sales at Madewell locations were up by ten percent, while sales at J. Crew stores were down by one percent.
Madewell was in the process of going public as a way to help J. Crew's financial situation, but the IPO was put on hold because of the coronavirus pandemic.
"Madewell was supposed to be the saving grace. This is an asset that lenders were fighting over for years," Reshmi Basu, an expert in retail bankruptcies at Debtwire, which tracks the finances of troubled companies, told CNN. "But no one wants to do an IPO right now, especially a retail IPO. Covid-19 upturned everything,"
J. Crew said the company will continue to operate stores during the proceedings and is planning to emerge from bankruptcy as a profitable company. J. Crew operates 500 stores and employs 14,500 people.
"Throughout this process, we will continue to provide our customers with the exceptional merchandise and service they expect from us, and we will continue all day-to-day operations, albeit under these extraordinary COVID-19-related circumstances. As we look to reopen our stores as quickly and safely as possible, this comprehensive financial restructuring should enable our business and brands to thrive for years to come," said Jan Singer, Chief Executive Officer, J.Crew Group.
Photo: Getty Images