J.Crew Has Filed for Bankruptcy Following Declines in Sales
J.Crew Group is the first major US retailer to file for bankruptcy protection since coronavirus forced a nationwide shutdown
UPDATE 5/4: J.Crew Group has filed for bankruptcy protection.
On Monday, the beloved New York-based label — which has become a wardrobe staple for celebrities including Michelle Obama, Kate Middleton and Meghan Markle — announced it filed for Chapter 11 bankruptcy in a Virginia federal court, multiple outlets report.
J.Crew Group lenders have agreed to convert the company's estimated $1.65 billion of debt into stock. According to several reports, the company (which operates the denim-driven label Madewell, in addition to its namesake brand) will continue e-commerce sales and hopes to reopen stores when social distancing restrictions are lifted.
"We will continue all day-to-day operations," J.Crew Group CEO Jan Singer said in a statement, according to CNN.
The news confirms CNBC's report published on Friday, which stated that the privately held company was preparing to file for bankruptcy very soon, citing “people familiar with the matter.”
The source said that J.Crew Group was “working to secure $400 million in financing to fund operations in bankruptcy,” according to CNBC.
J.Crew declined PEOPLE's request for comment.
The filing follows reports that the retailer has been struggling with a heavy debt load for years. According to CNBC, the economic downfall caused by the novel coronavirus (COVID-19) “exacerbated” the problem.
Though Madewell is just a fraction of the size of J.Crew, the company planned to leverage a 2020 IPO of the successful brand to lessen its debt, according to the Wall Street Journal.
Unlike the younger and trendier Madewell, J.Crew has also faced a decline in sales, with many criticizing the label for maintaining a high price point and an idealized aesthetic that feels out of touch, prompting loyal customers to walk away.
In recent years, J.Crew has lost both retail executive Mickey Drexler and longtime creative director, Jenna Lyons.
Lyons became somewhat of a fashion icon during her 26 years at J.Crew, thanks to her signature thick-rimmed glasses and affinity for colorful prints. She is also largely responsible for revamping the brand using neon, sequins and statement accessories— and shaping the way American men and women dressed in the 2010s.
“Jenna and I got together and we both agreed it was time for a change,” Drexler told Business of Fashion after her departure in 2017. “That being said, she’s got plans to do other things. It’s been a great run. There’s a lot of mutual respect between Jenna and me.”
The announcement came as a surprise, given her influence on the fashion industry. Still, Lyons shared similar sentiments.
“It has been beyond my wildest dreams to work with such an amazing team of people at such an incredible brand and alongside Mickey—one of retail’s most talented visionaries,” she said in a statement in 2017. “I am excited about the next chapter for J.Crew as well as the opportunity for other creative leaders within the organization to step up and take on new responsibilities. Having spent the better part of my life with J.Crew, I feel an immense pride and love for everyone at the company.”