Preppy clothing retailer J. Crew is planning to file for bankruptcy as soon as this weekend, various news outlets reported yesterday.
The company is seeking $400 million in financing to fund its operations through bankruptcy, CNBC reported. The company had expected to pay down part of its $1.7 billion in debt with proceedings from taking its subsidiary Madewell public, but the IPO was scrapped in March, according to the Wall Street Journal.
J. Crew, which opened its first store in South Street Seaport in 1983, now operates 182 of its own retail stores and 140 Madewell stores. TPG Capital and Leonard Green & Partners acquired the company for $3 billion in 2011.
Like many traditional apparel retailers, J. Crew has been struggling with growing debt and declining sales for years. Then, the spread of coronavirus forced the company to shutter all of its stores in March. The pandemic has accelerated the death of many retailers that were already strapped for cash. In-person sales dried up overnight, and many brick-and-mortar businesses have been forced to lay off and furlough thousands of employees.
The retailer managed to generate $1.5 million in profits for the fiscal year that ended Feb. 1, compared to a $74.4 million loss the year before, according to the Journal. However, the company is facing large payments on loans that mature in 2021, after it executed a complex restructuring deal outside of bankruptcy in 2017.
High-end retailer Neiman Marcus, facing similar headwinds, is also prepping a bankruptcy filing, as Commercial Observer previously reported.