J. Crew Launched Debt Restructuring Plan

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group

Recently, the situation is extremely bad. So far, sales have declined for 11 consecutive quarters, losing for two consecutive years.

In the first quarter of this fiscal year ending April 29th, the key financial data of J. Crew are as follows:

Total sales of $532 million, down 6% from the same period last year, fell 9% compared with the same period last year, a decline of 7% compared to the same period last year.

Operating loss was $153 million, operating profit for the same period last year was $7 million 300 thousand.

Adjusted EBITDA (profit before interest tax depreciation amortization) was $26 million 600 thousand, down 41.4% over the same period last year.

Its namesake

Sales of J. Crew were $429 million, down 12% over the same period last year.

The total sales volume of another brand Madewell increased by 17% compared with the same period last year, to 84 million 700 thousand US dollars, up 10% over the same period last year.

Above: a map of comparable sales growth of J. Crew in the past 12 quarters

Despite poor performance in the first quarter, J. Crew said it did not change the prediction of EBITDA to $1.9 to $210 million for the 2017 fiscal year.

The company's outgoing CEO Mickey Drexle said: "although we are disappointed with the first quarter's earnings, the measures we have taken have begun to take effect and the performance will gradually improve."

The group's cash reserves increased to $105 million from $54 million 700 thousand in the same period last year, while total liabilities fell by 1% compared to the same period last year, and still up to $1 billion 500 million.

Debt laden

At the beginning of this month, Millard Drexler announced that it will step down as CEO, and be succeeded by James Brett Brett, the current president of West Elm, the US high-end home retailer, who will take office in July this year.

After that, Millard Drexler will continue to serve as chairman of the board of directors of the company.

In order to bring J. Crew out of the mire, the first problem that Brett needs to solve is the high debt platform.

At present, $567 million of J. Crew's liabilities will expire in 2019. In order to gain more time, J. Crew Crew announced on Tuesday that it would offer a price to the debtor, with the secured bonds and equity obligations due in 2021, to exchange debentures for the bonds that will be due in 2019.

At present, 67% of bondholders have accepted the offer, and 95% of bondholders must accept the offer if they want the paction to be carried out.

If the paction is carried out, it will be completed within a month.

If the paction is successful, Brett will not face a lot of debt maturity before 2021, so that he will have enough time to make adjustments to the business.

J. Crew's decision to split intellectual property rights was opposed by other bondholders.

J.Crew said it would later convert this part of the debt that had lost IP to a new company that undertook the same brand IP IP, and offered equity to the bondholders.

As the two sides could not reach agreement on this matter, they finally decided to go to court.

In order to settle the lawsuit, J. Crew said that it would provide compensation for the holders of long-term bonds with a face value of US $150 million, in the hope that the other party could withdraw the pending litigation.

At present, 28% of long-term bond holders agree with the proposal.

50% of bondholders agree to implement the proposal formally.

According to relevant market regulation data, after the announcement, the price of 5.67 billion dollar bonds, which expired in 2019, rose by 8.5% on Tuesday to 60 cents (face value of $100).

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