The New York Times reports that "preppy-with-a-twist" fashion retailer J. Crew is expected to file for bankruptcy protection as soon as today, with expectations that it will turn the company over to its creditors.
The story says that J. Crew "would be the first major retailer to fall during the coronavirus pandemic, though other big industry names including Neiman Marcus and J.C. Penney are likewise struggling with the devastating toll of mass shutdowns."
The company has been in negotiations for weeks about how to handle its mounting debt The Times writes that the company "was carrying a debt burden of $1.7 billion based on a leveraged buyout in 2011 by two private-equity firms — TPG Capital and Leonard Green & Partners — even before the coronavirus brought clothing sales to a near-halt in the 182 stores, 140 Madewells and 170 outlets it was running as of early March. And it had struggled to adapt to changing consumer tastes."
Meanwhile, Bloomberg reports that "high-end cookware chain Sur La Table Inc. is preparing for a potential bankruptcy filing after the pandemic forced it to close stores and cancel cooking classes, according to people familiar with the matter.
"The chain, with about 125 stores, is also pursuing a sale, said the people, who asked not to be identified because the process isn’t public."
- KC's View:
It somehow is completely unsurprising that J. Crew has accumulAted so much debt since being acquired by a pair of private equity groups. It is a pretty good bet that both those groups have covered their own fiscal rear ends even as the company went into the tank.