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| J. Crew Files for Bankruptcy in Virus’s First Big Retail Casualty | J. Crew Files for Bankruptcy in Virus’s First Big Retail Casualty |
| (3 days later) | |
| J. Crew, the mass-market clothing company whose preppy-with-a-twist products were worn by Michelle Obama and appeared at New York Fashion Week, filed for bankruptcy protection on Monday. It is the first major retailer to fall during the coronavirus pandemic, though other big industry names including Neiman Marcus and J.C. Penney are also struggling with the toll of mass shutdowns. | J. Crew, the mass-market clothing company whose preppy-with-a-twist products were worn by Michelle Obama and appeared at New York Fashion Week, filed for bankruptcy protection on Monday. It is the first major retailer to fall during the coronavirus pandemic, though other big industry names including Neiman Marcus and J.C. Penney are also struggling with the toll of mass shutdowns. |
| J. Crew announced that its parent company, Chinos Holdings, had filed for Chapter 11 protection in federal bankruptcy court for the Eastern District of Virginia. As part of its financial reorganization plan, it will hand over control to top creditors, including the hedge fund Anchorage Capital, by converting $1.65 billion of its debt into equity. The company, which has secured a $400 million debtor-in-possession loan, also plans to hold onto its Madewell brand, which it had considered spinning off into a public company. | J. Crew announced that its parent company, Chinos Holdings, had filed for Chapter 11 protection in federal bankruptcy court for the Eastern District of Virginia. As part of its financial reorganization plan, it will hand over control to top creditors, including the hedge fund Anchorage Capital, by converting $1.65 billion of its debt into equity. The company, which has secured a $400 million debtor-in-possession loan, also plans to hold onto its Madewell brand, which it had considered spinning off into a public company. |
| J. Crew added that its online business would continue to operate normally throughout its restructuring, and that it planned to reopen its J. Crew and Madewell stores once lockdowns are lifted. Gift cards and returns and exchanges would not be affected, it said in a message to customers, adding that it planned to serve shoppers “for years to come.” | J. Crew added that its online business would continue to operate normally throughout its restructuring, and that it planned to reopen its J. Crew and Madewell stores once lockdowns are lifted. Gift cards and returns and exchanges would not be affected, it said in a message to customers, adding that it planned to serve shoppers “for years to come.” |
| “This agreement with our lenders represents a critical milestone in the ongoing process to transform our business,” Jan Singer, J. Crew’s chief executive, said in a statement. | “This agreement with our lenders represents a critical milestone in the ongoing process to transform our business,” Jan Singer, J. Crew’s chief executive, said in a statement. |
| The company had been in negotiations with lenders on how to handle its debt for weeks and made the decision after its board conferred Sunday evening, according to two people with knowledge of the situation, who spoke on the condition of anonymity because discussions were confidential. | The company had been in negotiations with lenders on how to handle its debt for weeks and made the decision after its board conferred Sunday evening, according to two people with knowledge of the situation, who spoke on the condition of anonymity because discussions were confidential. |
| The pandemic has been disastrous for the already weakened retail industry. In March, sales of clothing and accessories fell by more than half. The numbers for April are expected to be worse, because many stores were open for at least some of March (e-commerce, a relatively small contributor to total sales for most store chains, is not enough to make up for the closures). | The pandemic has been disastrous for the already weakened retail industry. In March, sales of clothing and accessories fell by more than half. The numbers for April are expected to be worse, because many stores were open for at least some of March (e-commerce, a relatively small contributor to total sales for most store chains, is not enough to make up for the closures). |
| Retailers have furloughed employees, slashed executive salaries and hoarded cash in a desperate attempt to survive until the shutdowns are lifted. And there is widespread acknowledgment that J. Crew is unlikely to be the only retailer to face the brink. | Retailers have furloughed employees, slashed executive salaries and hoarded cash in a desperate attempt to survive until the shutdowns are lifted. And there is widespread acknowledgment that J. Crew is unlikely to be the only retailer to face the brink. |
| J. Crew 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 its 181 stores, 140 Madewells and 170 outlets. It had also struggled to adapt to changing consumer tastes. | J. Crew 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 its 181 stores, 140 Madewells and 170 outlets. It had also struggled to adapt to changing consumer tastes. |
| But it seemed to be making strides in recent months toward a more viable future. The company named Ms. Singer its new chief executive in January and was planning an initial public offering of Madewell this spring in order to pay down some of the debt and rehabilitate the J. Crew brand. | But it seemed to be making strides in recent months toward a more viable future. The company named Ms. Singer its new chief executive in January and was planning an initial public offering of Madewell this spring in order to pay down some of the debt and rehabilitate the J. Crew brand. |
| The coronavirus pandemic scuttled those plans and eventually toppled the company. | The coronavirus pandemic scuttled those plans and eventually toppled the company. |
| J. Crew started life in 1947 as a family-run low-priced clothing line for women called Popular Club Plan, and in 1983 it was renamed and reinvented as a catalog company selling turtleneck tops and crew neck sweaters in “Preppy Handbook” shades. It made the leap to household name and 21st century fashion fairy tale in October 2008 when Mrs. Obama, whose husband was then the Democratic candidate for president, appeared on “The Tonight Show With Jay Leno.” This was just days after it had been revealed that Sarah Palin, the Republican candidate for vice president, had been given a costly wardrobe makeover. “I want to ask you about your wardrobe,” Mr. Leno said to Mrs. Obama. “I’m guessing about 60 grand? Sixty, 70 thousand for that outfit?” | J. Crew started life in 1947 as a family-run low-priced clothing line for women called Popular Club Plan, and in 1983 it was renamed and reinvented as a catalog company selling turtleneck tops and crew neck sweaters in “Preppy Handbook” shades. It made the leap to household name and 21st century fashion fairy tale in October 2008 when Mrs. Obama, whose husband was then the Democratic candidate for president, appeared on “The Tonight Show With Jay Leno.” This was just days after it had been revealed that Sarah Palin, the Republican candidate for vice president, had been given a costly wardrobe makeover. “I want to ask you about your wardrobe,” Mr. Leno said to Mrs. Obama. “I’m guessing about 60 grand? Sixty, 70 thousand for that outfit?” |
| “Actually, this is a J. Crew ensemble,” Mrs. Obama replied, referring to her $148 yellow pencil skirt, $148 yellow and brown print tank top and $118 matching yellow cardigan. “Ladies, we know J. Crew. You can get some good stuff online!” | “Actually, this is a J. Crew ensemble,” Mrs. Obama replied, referring to her $148 yellow pencil skirt, $148 yellow and brown print tank top and $118 matching yellow cardigan. “Ladies, we know J. Crew. You can get some good stuff online!” |
| It was a priceless marketing moment. After that, everyone knew J. Crew, which seemed to embody the high/low mix-and-match trend of the moment. | It was a priceless marketing moment. After that, everyone knew J. Crew, which seemed to embody the high/low mix-and-match trend of the moment. |
| The company was purchased by TPG in 1997 in a leveraged buyout from the founding Cinader family, and was taken public in 2003 — only to be reacquired for approximately $3 billion by TPG and Leonard Green & Partners nearly a decade ago. | The company was purchased by TPG in 1997 in a leveraged buyout from the founding Cinader family, and was taken public in 2003 — only to be reacquired for approximately $3 billion by TPG and Leonard Green & Partners nearly a decade ago. |
| Its creative director, Jenna Lyons, who first joined as part of the design team in 1990, became a boldface name, known for her black-rimmed glasses, gangly frame and love of sequins and camouflage. Newspaper reports crowed about the comeback of the company’s chief executive, Millard S. Drexler, who had previously led Gap Inc. for years. Mr. Drexler, who goes by Mickey, became famous for riding his bicycle around the office and checking in with store associates via speakerphone. | Its creative director, Jenna Lyons, who first joined as part of the design team in 1990, became a boldface name, known for her black-rimmed glasses, gangly frame and love of sequins and camouflage. Newspaper reports crowed about the comeback of the company’s chief executive, Millard S. Drexler, who had previously led Gap Inc. for years. Mr. Drexler, who goes by Mickey, became famous for riding his bicycle around the office and checking in with store associates via speakerphone. |
| In 2011 J. Crew became the first mass-market accessible brand to breach the high fashion parapet and present at New York Fashion Week. Vogue crowned the brand “a significant voice in the conversation on American style.” As the face of the brand, Ms. Lyons attended the Met Gala and, in 2014, played a role on the HBO show “Girls.” | In 2011 J. Crew became the first mass-market accessible brand to breach the high fashion parapet and present at New York Fashion Week. Vogue crowned the brand “a significant voice in the conversation on American style.” As the face of the brand, Ms. Lyons attended the Met Gala and, in 2014, played a role on the HBO show “Girls.” |
| In 2017, however, after two years of falling sales, Ms. Lyons left the company. J. Crew, the criticism went, had gone too fashion, falling into the trap of prizing quirk over quality and pricing itself out of practicality. It had diminished its own brand with a heavy push into outlet merchandise. (There are now nearly as many full-price J.Crew stores as factory stores.) And it had never focused enough on e-commerce. Madewell, its younger, simpler — “more authentic” — sister brand, acquired by Mr. Drexler in 2006, was the company’s new shining star. Indeed, after Ms. Lyons left, Madewell’s designer, Somsack Sikhounmuong, who had switched over to J. Crew in 2015, took the top creative spot. Much was made of a return to core values. | In 2017, however, after two years of falling sales, Ms. Lyons left the company. J. Crew, the criticism went, had gone too fashion, falling into the trap of prizing quirk over quality and pricing itself out of practicality. It had diminished its own brand with a heavy push into outlet merchandise. (There are now nearly as many full-price J.Crew stores as factory stores.) And it had never focused enough on e-commerce. Madewell, its younger, simpler — “more authentic” — sister brand, acquired by Mr. Drexler in 2006, was the company’s new shining star. Indeed, after Ms. Lyons left, Madewell’s designer, Somsack Sikhounmuong, who had switched over to J. Crew in 2015, took the top creative spot. Much was made of a return to core values. |
| It was too little, too late. For a fashion brand to thrive it must be either needed or wanted. J. Crew, sitting somewhere in the netherland of style and price, was neither. A few months after Ms. Lyons’s departure, Mr. Drexler stepped down and Mr. Sikhounmuong left two months later, starting a round robin of executives and designers. That served ultimately to confuse rather than clarify the identity of the company and its strategy. Jan Singer, formerly of Nike and Victoria’s Secret, was named J. Crew’s newest leader in January. | It was too little, too late. For a fashion brand to thrive it must be either needed or wanted. J. Crew, sitting somewhere in the netherland of style and price, was neither. A few months after Ms. Lyons’s departure, Mr. Drexler stepped down and Mr. Sikhounmuong left two months later, starting a round robin of executives and designers. That served ultimately to confuse rather than clarify the identity of the company and its strategy. Jan Singer, formerly of Nike and Victoria’s Secret, was named J. Crew’s newest leader in January. |
| Updated June 5, 2020 | |
| The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April. | |
| Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission. | Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission. |
| Exercise researchers and physicians have some blunt advice for those of us aiming to return to regular exercise now: Start slowly and then rev up your workouts, also slowly. American adults tended to be about 12 percent less active after the stay-at-home mandates began in March than they were in January. But there are steps you can take to ease your way back into regular exercise safely. First, “start at no more than 50 percent of the exercise you were doing before Covid,” says Dr. Monica Rho, the chief of musculoskeletal medicine at the Shirley Ryan AbilityLab in Chicago. Thread in some preparatory squats, too, she advises. “When you haven’t been exercising, you lose muscle mass.” Expect some muscle twinges after these preliminary, post-lockdown sessions, especially a day or two later. But sudden or increasing pain during exercise is a clarion call to stop and return home. | Exercise researchers and physicians have some blunt advice for those of us aiming to return to regular exercise now: Start slowly and then rev up your workouts, also slowly. American adults tended to be about 12 percent less active after the stay-at-home mandates began in March than they were in January. But there are steps you can take to ease your way back into regular exercise safely. First, “start at no more than 50 percent of the exercise you were doing before Covid,” says Dr. Monica Rho, the chief of musculoskeletal medicine at the Shirley Ryan AbilityLab in Chicago. Thread in some preparatory squats, too, she advises. “When you haven’t been exercising, you lose muscle mass.” Expect some muscle twinges after these preliminary, post-lockdown sessions, especially a day or two later. But sudden or increasing pain during exercise is a clarion call to stop and return home. |
| States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people. | States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people. |
| Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks. | Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks. |
| Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days. | Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days. |
| If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) | If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) |
| Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications. | Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications. |
| The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing. | The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing. |
| If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. | If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. |
| If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested. | If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested. |
| Madewell, which filed for an I.P.O. in the fall, was expected to go public this spring while J. Crew remained private, but those plans were ultimately scrapped in March as the stock market spiraled, adding a new wave of pressure and question marks to J. Crew’s future. | Madewell, which filed for an I.P.O. in the fall, was expected to go public this spring while J. Crew remained private, but those plans were ultimately scrapped in March as the stock market spiraled, adding a new wave of pressure and question marks to J. Crew’s future. |
| J. Crew clearly had plenty of problems even without its massive debt load. Ongoing interest payments and looming maturities only added to the company’s challenges, and in the eyes of some, left it ill-equipped to adjust to a new shopping environment. | J. Crew clearly had plenty of problems even without its massive debt load. Ongoing interest payments and looming maturities only added to the company’s challenges, and in the eyes of some, left it ill-equipped to adjust to a new shopping environment. |
| As the retail landscape has shifted, “these businesses have faced a huge investment need,” said Raya Sokolyanska, a senior analyst at Moody’s. “Having a burdened balance sheet certainly greatly diminishes their chances of doing this successfully.” | As the retail landscape has shifted, “these businesses have faced a huge investment need,” said Raya Sokolyanska, a senior analyst at Moody’s. “Having a burdened balance sheet certainly greatly diminishes their chances of doing this successfully.” |
| That’s even more challenging for fashion retail, she said, which is “notoriously fickle.” | That’s even more challenging for fashion retail, she said, which is “notoriously fickle.” |
| Now the question is whether the upheaval of the retail industry — which predates the pandemic, with the collapse of Barneys New York late last year — will continue. | Now the question is whether the upheaval of the retail industry — which predates the pandemic, with the collapse of Barneys New York late last year — will continue. |
| “The companies going into bankruptcy, for the most part, were companies that were struggling before Covid — we have not seen true Covid-only bankruptcies,” said James Van Horn, a partner at the law firm Barnes & Thornburg and a specialist in retail bankruptcy. | “The companies going into bankruptcy, for the most part, were companies that were struggling before Covid — we have not seen true Covid-only bankruptcies,” said James Van Horn, a partner at the law firm Barnes & Thornburg and a specialist in retail bankruptcy. |
| However, he added, “depending on how the current situation continues, that may change.” | However, he added, “depending on how the current situation continues, that may change.” |
| For instance, Brooks Brothers, another quintessential American shopping institution, is already facing questions about its future. | For instance, Brooks Brothers, another quintessential American shopping institution, is already facing questions about its future. |
| “In the ordinary course of business, Brooks Brothers consistently explores various strategic options to position the company for growth and success, in partnership with its financial advisers at P.J. Solomon,” a spokesman said, in response to question about a potential sale. | “In the ordinary course of business, Brooks Brothers consistently explores various strategic options to position the company for growth and success, in partnership with its financial advisers at P.J. Solomon,” a spokesman said, in response to question about a potential sale. |