The pressure of ever-growing debt of US $ 2 billion is mounting on J.Crew Group Inc., omni-channel retailer of women’s, men’s and children’s apparel, shoes and accessories, as it sold itself for US $ 3 billion dollars in 2011 to private equity firms TPG Capital, Leonard Green and CEO Mickey Drexler which later slashed the value of its stake by 84 per cent.
The retailer has lost customers over the past two years, complaining of high prices on low-quality and ill-fitting clothes, and moreover its same-store sales have fallen in 10 of the past 11 quarters. J.Crew is focusing on its preppy heritage, expanding its discount business and fuelling the growth of its small but successful Madewell brand geared toward millennials to save the company from drowning.
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In the past months, the company’s management has explored the possibility of moving the rights to its iconic brand into a separate subsidiary. This move would give J.Crew the opportunity to raise new financing to buy back its loans and bonds at a discount, or offering creditors the chance to swap into the new debt holdings.
