We had them on our list of stores that might not return after coronavirus, and on Monday, May 4, J.Crew filed for bankruptcy protection.
The company was in trouble before the pandemic hit, and now their plans to make a comeback have been altered significantly.
Permanent store closures could happen.
J.Crew is taking a look at the leases for their nearly 500 total stores. They announced in a court filing that they’ve hired a real estate consultancy firm and a liquidator to help them figure out what to do next.
If they can’t negotiate down their rent in some locations, store closures are on the table.
J.Crew has decided not to spin off Madewell.
J.Crew Group has 181 J.Crew stores, 140 Madewell stores, and 170 J.Crew factory stores. The company has been one of the most debt-ridden in the retail world, and a big part of their comeback plan was to spin off their popular women’s apparel stores, Madewell, into its own private company, which would help them pay off some of their debt.
As part of the bankruptcy announcement, J.Crew has said they’ve abandoned the Madewell plan.
Their post-COVID future doesn’t look any better.
Although J.Crew released a statement saying they’ve got a plan to “thrive for years to come,” they’ll be dealing with the same threats all mall-based retailers are experiencing: reduced foot traffic, online shopping, and cheaper alternatives.
The company is looking to convert $1.65 billion in debt to equity, which means they’re going to attempt to convince their debtors to accept part ownership in the company rather than be owed money. Whether they’ll do that remains to be seen.
Just because J.Crew has gone bankrupt, it doesn’t mean the end is imminent.
Sears filed for bankruptcy in 2018 and is still around, and Forever 21 filed bankruptcy in September 2019. Both of those stores are still open (although they’re both on our closure watch list).
Even Toys ‘R’ Us had nearly a year between filing bankruptcy (Sept. 2017) and finally liquidating and closing all stores (end of June 2018).
The end could likely be coming for J.Crew, but not in the near future.
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