J.Crew Group Inc. is the first retail chain to to seek bankruptcy protection due to the coronavirus pandemic. They filed for chapter 11 protection after swapping $2 billion in debt for an 82% stake in the reorganized J.Crew.
Since 2016, J.Crew's store count has dropped by hundreds. Last year, they had an annual net profit loss of $78.8 million. Due to the coronavirus, J.Crew shut down 500 stores in March, laid off tends of thousands or workers, decided not to pay April rents and tapped credit lines. They are expected to lose $900 million in sales because of the coronavirus outbreak, according to the company's chief operating officer.
I find this interesting because this is a problem that is not only happening to J.Crew but to thousands of other retailers too. For example, Neiman Marcus Group Inc. and J.C. Penny Co. are expected to do the same soon. When customers are no longer demanding certain products, there is less competition. Eventually, this affects all parts of the retail industry, and in turn affects millions of people.
Link: https://www.wsj.com/articles/j-crew-files-for-bankruptcy-protection-reaches-debt-swap-deal-11588583196?mod=business_lead_pos1&ns=prod/accounts-wsj
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