J.Crew files for Chapter 11 bankruptcy

NEW YORK (AP) — The owner of J.Crew is filing for Chapter 11 bankruptcy, two months after the first person in New York tested positive for COVID-19.

The city, where J.Crew Group Inc. is based, went into lockdown soon after, followed by much the country. Retail stores in New York City and across the country shut their doors.

More bankruptcies across the retail sector are expected in coming weeks.

J.Crew, already in trouble before the pandemic and laden with debt, and was acquired by TPG Capital and Leonard Green & Partners for $3 billion in 2011.

Operations at J.Crew will continue throughout a restructuring and clothing will still be available to purchase online.

The company said Monday that it anticipates its stores will reopen when it's safe to do so.

Retail veteran Mickey Drexler led J.Crew for more than a decade when it become a coveted fashion brand. But the chain appeared to lose its way at some point and Drexler severed his last ties with the company in January 2019.

There are a number of retail chains that were already teetering at the start of the year, but the pandemic is wreaking havoc equally across the entire sector. J.Crew is not the first to seek protection during the coronavirus outbreak, and no one expects it to be the last.

J.C. Penney and Neiman Marcus are expected to follow J.Crew. Jeans maker True Religion Apparel Inc. filed for bankruptcy protection last month.

Clothing store sales plummeted 50.5% in March, according to the latest Commerce Department report, and it has grown worse since.

In its last full year of operations, J.Crew generated $2.5 billion in sales, a 2% increase from the year before.

J.Crew had aimed to spin off its successful Madewell division as a public company and use the proceeds to pay down its debt. The company said Monday that Madewell will remain part of J.Crew Group Inc.

There were 193 J.Crew stores, 172 J.Crew Factory outlets and 132 Madewell locations as of Feb. 1.