The coronavirus has put enormous strain on fashion retail business across the world, leading to substantial employee furloughs and other cost-cutting measures. Clothing and accessories sales fell by more than half in March alone and the numbers for April are projected to be worse. Nearly all major fashion brands have managed to stay afloat so far, but on Monday, preppy clothing empire J. Crew filed for bankruptcy, prompting the New York Times to call the company “the first major retailer to fall during the coronavirus pandemic.”
J. Crew’s parent company Chinos Holdings submitted the filing to a federal bankruptcy court for the Eastern District of Virginia. The financial plan in place will see the company hand over control to a group of creditors, including the hedge fund Anchorage Capital. The company’s chief executive Jan Singer said in a statement, “This agreement with our lenders represents a critical milestone in the ongoing process to transform our business.”
The company relayed in its bankruptcy announcement that online sales will operate throughout the case and it plans to hold on to the Madewell brand. J. Crew also plans to shutter some of its stores, according to HuffPost, though the numbers have yet to be revealed. Remaining J. Crew and Madewell stores are slated to reopen when social distancing directives ease.
The Times’ reporting indicates that J. Crew, which has been in business since 1947, was on shaky ground before the pandemic hit. The brand was already $1.7 billion in debt and “struggled to adapt to changing consumer taste.” Huffpost posits that J. Crew made a “strategic misstep” when it recently decided to raise prices. The company only narrowly avoided having to file for bankruptcy in 2017 by making deals with its creditors. In the hopes of paying off some of its debt, the company had filed an initial public offering for Madewell in the fall, with plans of taking the brand public this spring, and hired a new chief executive. The efforts did not prove enough to prevent the company from failing amid mass coronavirus-related shutdowns.