Clothing retailer J. Crew gears up to file for bankruptcy – Orange County Register
Clothing retailer J Crew, which operates more than 20 Southern California sites under the J. Crew and Madewell banners, is preparing to file for bankruptcy as part of a decision that could be taken as early as this weekend.
The New York-based private retailer is scrambling to secure $ 400 million in funding in an attempt to stay afloat, according to insiders familiar with the situation.
Representatives for J. Crew could not be reached for comment on Friday.
Traders are struggling
J.Crew joins a growing list of physical retailers struggling to stay in business as the COVID-19 health crisis unfolds. Many faced challenges before the coronavirus hit, as consumers increasingly turned to shopping with Amazon and other companies online.
Analysts say some retailers will have to scale back operations with fewer stores, a move that translates into big discounts for shoppers but big job losses for workers.
“Last nail in the coffin”
“Many are going to close their doors,” said Lars Perner, assistant professor of clinical marketing at USC Marshall School of Business. “Online sales have really hurt these businesses, and the coronavirus is the last nail in the coffin. “
J. Crew was heavily in debt and facing sales problems before the outbreak and the temporary closure of all of its stores made matters worse.
The fashionable retailer operates 182 J. Crew retail stores and 140 Madewell stores, a youth-focused brand that it launched in 2006.
A large Southern California footprint
Locally, J.Crew stores can be found in Costa Mesa, Mission Viejo, Sherman Oaks, Thousand Oaks, Glendale, Los Angeles, Santa Monica, Pasadena, El Segundo and Torrance.
Madewell locations are located in Pasadena, Glendale, Studio City, Canoga Park, Los Angeles, Pacific Palisades, Santa Monica, El Segundo, Torrance, Costa Mesa, and Mission Viejo.
The company had hoped to split its Madewell division in an IPO to help reduce debt, CNN reported, but creditors objected.
Others are in trouble
Neiman Marcus, which operates five department stores in Southern California under the names Neiman Marcus and Last Call, announced in April that it was also preparing to file for bankruptcy.
The company is $ 4.8 billion in debt and recently skipped millions of dollars in debt repayments, including one that only gave it a few days to avoid default.
JC Penney is also considering filing for bankruptcy as a way to reorganize his unsustainable finances and save money on impending debt payments.
Little need for new clothes
Perner said clothing retailers are experiencing additional fallout as people are essentially confined to the home with little or no need to purchase new clothing.
“What I don’t know is what will happen to all the empty stores,” he said. “They have succeeded in converting shopping center stores into gymnasiums or restaurants. But what if you have a freestanding building? What are you doing with it? “
Moneywise reports that a record 9,500 stores closed in 2019. But more than 15,000 could close in 2020 as retail chains will struggle to recover from coronavirus closures, according to an estimate by Coresight Research reported by Retail Dive.