May 4, 2020
by Daphne Sorenson
J. Crew, the New York City-based fashion brand known for making the “preppy look” popular in the 1980s, has filed for Chapter 11 bankruptcy, while its stores remain closed during the coronavirus pandemic. According to Bloomberg: “Anchorage Capital Group, Blackstone Group Inc.’s GSO Capital Partners and Davidson Kempner Capital Management will be among J. Crew’s new owners and will shape the board of directors once it exits bankruptcy, according to court papers. Those firms are leading a $400 million bankruptcy loan to keep J. Crew operating.”
The company was founded in 1947 under the name Popular Merchandise, Inc., and then changed its named to J. Crew in 1983. J. Crew became known for selling upscale “preppy” clothes for the type of customers who wanted to project an image that they have the money to belong to a country club or to have their own boats.
J. Crew has approximately 500 stores, including the brands Madewell and the lower-priced J. Crew Factory. Even before the coronavirus pandemic (when J. Crew closed all of its factories and retail locations, as of March 17, 2020), the company was already headed toward financial disaster, since it had been closing an increasing number of stores since 2018.
J. Crew is among the growing list of fashion retailers that have declared bankruptcy since 2018. Barney’s filed for bankruptcy in 2019, and Nieman Marcus is reportedly close to bankruptcy as well. Casualties in the high-end fashion retail business that have completely shuttered in the past year have included Lord & Taylor and Henri Bendel.
Non-luxury fashion retailers have also been victims of the “retail apocalypse,” which has been largely blamed on the rise of online shopping. Low-end clothing retailers that shuttered in 2019 included Gymboree and Payless ShoeSource. Fashion retailers that had a massive percentage of store closures in 2018 and 2019 included Ann Taylor, Dressbarn, Victoria’s Secret, Gap, Kohl’s, Abercrombie & Fitch, Foot Locker, Children’s Place and David’s Bridal. A few fashion retailers (such as Charlotte Russe and Bebe) have emerged from bankruptcy and are slowly trying to build back their business under new ownership. Department stores that carry fashion (such as Macy’s, JC Penney, Kmart and Sears) have also been closing stores.