The owner of J.Crew is filing for Chapter 11 bankruptcy just over three months after the first person in the United States tested positive for COVID-19, the illness caused by the novel coronavirus.
More bankruptcies across the retail sector are expected in the coming weeks with most stores still closed, though some states have begun a staggered restart to their economies.
Sales at stores and restaurants plunged in March by the largest amount on records that date back to 1992. That threatens the overall economic health of the U.S. because consumers drive 70 per cent of economic activity in the country.
Parts of the retail sector were already under duress before the arrival of COVID-19 due to seismic changes in what is bought and how. The most vulnerable are losing the ability to pay bills.
J.Crew, already in trouble before the pandemic and laden with debt, was acquired by TPG Capital and Leonard Green & Partners for $3 billion US in 2011.
Operations at J.Crew will continue throughout a restructuring, and clothing will still be available to purchase online.
The company said Monday that it anticipates its stores will reopen when it's safe to do so.
Retail veteran Mickey Drexler led J.Crew for more than a decade when it became a coveted fashion brand. But the chain appeared to lose its way at some point, and Drexler severed his last ties with the company in January 2019.
Not the first, not the last
J.Crew is not the first to seek protection during the coronavirus outbreak, and no one expects it to be the last.
J.C. Penney and Neiman Marcus are expected to follow J.Crew. Jeans maker True Religion Apparel Inc. filed for bankruptcy protection last month.
Clothing store sales plummeted 50.5 per cent in March, according to the latest Commerce Department report, and it has grown worse since.
In its last full year of operations, J.Crew generated $2.5 billion in sales, a two per cent increase from the year before.
J.Crew had aimed to spin off its successful Madewell division as a public company and use the proceeds to pay down its debt. The company said Monday that Madewell will remain part of J.Crew Group Inc.
There were 193 J.Crew stores, 172 J.Crew factory outlets and 132 Madewell locations as of Feb. 1.
https://news.google.com/__i/rss/rd/articles/CBMiPGh0dHBzOi8vd3d3LmNiYy5jYS9uZXdzL2J1c2luZXNzL2otY3Jldy1iYW5rcnVwdGN5LTEuNTU1NDI2NtIBIGh0dHBzOi8vd3d3LmNiYy5jYS9hbXAvMS41NTU0MjY2?oc=5
2020-05-04 14:04:00Z
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