J. Crew files for bankruptcy
J. Crew has become the first national retail chain to file for bankruptcy amid the coronavirus pandemic.
Anne D’Innocenzio reported the news for the AP:
Struggling fashion brand J.Crew has filed for bankruptcy protection, the first major retailer to do so since the coronavirus pandemic forced most stores across the United States to close their doors.
More retail bankruptcies are expected in coming weeks, with Neiman Marcus and J.C. Penney also facing problems. Gap Inc. has warned it is running out of cash and is looking for an infusion.
Thousands of retail stores across the country remain closed, though some states have begun staggered restarts of their economies.
J.Crew, like a number of major retailers, was already in trouble before the pandemic. It had grown from a preppy 1990s fashion staple to an “it” brand worn by former First Lady Michelle Obama and featured at New York Fashion Week. But at some point in recent years, its fashion choices began landing with a clunk in the highly competitive retail sector.
Washington Post’s Abha Bhattarai wrote:
The industry has been on a downward trajectory for years as retailers binged on debt and struggled for relevancy while online giants like Amazon and big-box mainstays like Walmart siphoned sales.
Now many retailers are losing their grip, with much of the economy shuttered by coronavirus lockdowns. And even as some states move to reopen, many Americans are hesitant to go back into brick-and-mortar establishments. As many as 25,000 stores could permanently close this year, according to liquidation firm Gordon Brothers, as businesses grapple with weeks-long closures and diminished demand for clothing, shoes and other nonessential items.
Roughly one-half of the country’s mall-based department stores could close by the end of 2021, according to real estate services firm Green Street Advisors.
Reuters’ Mike Spector reported:
J. Crew, which employed about 13,000 people before an April furlough program, is the first high-profile retailer to seek bankruptcy protection since the coronavirus spread across the globe, prompting government officials to order businesses deemed nonessential to temporarily close.
It is likely not the last. Department store chains Neiman Marcus Group and J.C. Penney Co Inc are contemplating bankruptcy filings amid the crisis, Reuters previously reported.
Anchorage Capital Group, Blackstone Group Inc’s GSO Capital Partners and Davidson Kempner Capital Management hold significant portions of J. Crew’s senior debt and are in line to take control of the company.
They are also providing about $400 million of fresh financing to aid J. Crew’s operations while it navigates Chapter 11 bankruptcy proceedings, the company said. J. Crew is expected to emerge from bankruptcy in September under its agreement with lenders.