J. Crew exits bankruptcy
J.Crew Group has emerged from bankruptcy with its store portfolio mostly unchanged.
The apparel retailer on Thursday said it has completed its financial restructuring process and emerged from Chapter 11 well-positioned for long-term growth. The plan puts J. Crew’s lenders, led by Anchorage Capital Group (now the majority owner of the company), in control of the retailer through the conversion of some $1.65 billion in debt into equity. It also provides a $400 million exit facility and $400 million of new term loans.
In addition, the company has access to a new $400 million asset-based credit facility due in 2025 from Bank of America, N.A.
J. Crew filed for bankruptcy protection in early May, one of the first major apparel brands to do so amid the pandemic. The company, however, had been struggling long before COIVD-19 hit, burdened by a huge debt load of $1.7 billion, some of it stemming from a leveraged buyout back in 2011.
Unlike some other retailers, J. Crew did not significantly reduce its store footprint while in bankruptcy. In August, the company announced it had reached agreements with landlords to improve lease terms on its store portfolio, saying it expects to realize “significant” lease savings over the remaining terms of the leases. It exits Chapter 11 down 11 namesake stores and up one Madewell location.
"Looking forward, our strategy is focused on three core pillars: delivering a focused selection of iconic, timeless products; elevating the brand experience to deepen our relationship with customers; and prioritizing frictionless shopping,” said Jan Singer, CEO, J.Crew Group.
Prior to the bankruptcy filing, J. Crew had filed to take its more casual brand, Madewell, public.
"We are energized by the opportunity ahead for the Madewell brand and ready to continue our momentum as we enter into a new phase of growth," said Libby Wadle, CEO of Madewell. "We will remain focused on maintaining our place as a leader in denim and innovating to create a differentiated shopping experience."
Added Kevin Ulrich, CEO of Anchorage: "We see an immense opportunity for growth and expansion at each brand and are confident their existing robust direct-to-consumer and e-commerce platforms will position the company to succeed in today's evolving retail landscape.”
As of September 10, 2020, J. Crew operates 170 namesake stores, 142 Madewell stores, and 170 J.Crew factory outlet stores nationwide along with its websites. At the time of its filing. The company operated 181 namesake stores, 140 Madewell stores and 170 factory outlets stores.