Bankrupt J.Crew Group Inc. has settled on a deal with property owners over its rent payments.
The American clothier announced today that it reached an agreement with its landlords to improve lease terms on its brick-and-mortar portfolio of J.Crew and Madewell units. It currently operates 178 J.Crew locations, 145 Madewell outposts, as well as the online platforms of both brands and 170 factory stores.
In a statement, J.Crew said it expects to achieve cash savings this year of roughly $70 million, which includes the benefit of one-time waivers and deferrals, as well as $60 million next year, assuming sales are in line with projections.
The discussions with landlords were part of the company’s restructuring process. After filing for Chapter 11 protection in early May, J.Crew received more than a dozen objections to its appeal to avoid rent obligations in the first couple months of its bankruptcy. Among the mall operators that raised issues with the New York-based chain, which shuttered its stores in March as the coronavirus pandemic took hold, were Simon Property Group Inc., Grand Place LLC, CBL & Associates Management Inc. and Brookfield Property REIT Inc.
As of yesterday, J.Crew has resumed business at 458 stores, which represents approximately 95% of its total fleet. With these reopenings, the retailer has brought back the “vast majority” of its associates who had been placed on furlough. It added that it has taken a “careful approach” to operating its locations to ensure that it complies with safety protocols in line with guidelines provided by the Centers for Disease Control and Prevention, plus those of local and state governments.
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Although the pandemic precipitated its demise, J.Crew has floundered for several years with disappointing financial results. At the end of the most recent fiscal year, the company had just $27.2 million left in cash, versus a debt load of about $1.7 billion. In its fourth-quarter earnings report, its flagship brand posted a sales decrease of 2% to $516.8 million, with comps that improved 1%. Madewell outperformed the business as a whole, logging a revenue increase of 13% to $178.1 million, along with a 9% rise in comps.