J.Crew’s bankruptcy filing may not be the last for retailers criticized by pandemic

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With millions of Americans out of work and its stores temporarily closed, J.Crew is headed for bankruptcy. It could be the first of several retailers to collapse during the coronavirus pandemic due to pre-crisis financial woes.

In announces bankruptcy filing Monday, J.Crew said he hopes the move helps him get his finances in order while the company continues to operate, although for now under COVID-19 restrictions. The company operates 181 J.Crew stores, 140 Madewell stores and 170 J.Crew Factory stores.

“As we seek to reopen our stores as quickly and safely as possible, this comprehensive financial restructuring should allow our business and our brands to thrive for years to come,” said Jan Singer, CEO of J.Crew Group, in a press release.

The coronavirus pandemic has left stores and malls closed for weeks, and many retailers have struggled to keep up with their bills. This has been particularly painful for companies already in financial difficulty, such as J.Crew, JC Penney, Neiman Marcus, Sears and Brooks Brothers. Many are now considering bankruptcies or sales, seeking to reduce their sprawling store networks.

Clothing sales fell more than 50% last month, as many workers were laid off or made redundant.

Now malls and stores are slowly starting to reopen in parts of the country, but it’s unclear how quickly Americans will start spending on clothing and accessories again given staggering unemployment. The gap, for example, has warned that some of its stores might simply never reopen.

J.Crew had narrowly avoided bankruptcy in recent years as his debt soared to nearly $ 1.7 billion, rising since the leveraged buyout by private equity firms deprived him in 2011.

The preppy retailer, launched in 1947 and christened J.Crew in 1983, enjoyed a sort of revival from the late 2000s to the early 2010s. The retailer, known for their straight silhouettes and preppy styles without the price of luxury , has been hailed as the favorite of former first lady Michelle Obama.

But soon it started its long, slow slowdown. More and more competitors have developed loyal fan bases online. J.Crew began to be criticized for its quality. Executives credited for the creative vision that led to the renaissance left in a wave.

J.Crew recently planned to repay some of that debt with an injection of cash from the spin-off of its more laid-back and younger affiliate brand, Madewell. But this public list has been suspended earlier this spring, and now looks untenable during the coronavirus market turmoil.

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