J. Crew is one of the many businesses that has felt the brunt of the economic slowdown caused by coronavirus. The clothing company is reportedly preparing to file for bankruptcy, which could happen as soon as this weekend, according to CNBC.
Multiple sources spoke with the outlet, though they did so on the condition on anonymity. They revealed that the privately-held company is currently working to secure $400 million in financing to fund operations in bankruptcy. However, they made it clear that plans haven't been finalized, so things could change. J. Crew declined to comment in an official capacity.
J. Crew operates 182 retail stores and 140 Madewell stores, the kids' grand it launched in 2006. The retailer had previously hoped to spin off the off-shoot brand into its own IPO that could have helped pay down the company's massive debt but the move was pushed back on by creditors. The year ending Feb. 1, the store had made about $2.5 billion in sales. Though it boasted roughly $2.5 billion in sales for its year ended Feb. 1, though is struggling under a heavy debt load and sales challenges.
Like most retailers, J. Crew took a severe hit with multiple states implementing Stay-at-Home orders and ordering all non-essential businesses close as a means to help slow the spread of coronavirus. As part of the $2 trillion CARES Act, which was passed in March to help keep the economy afloat, there was a special lone fund set up to help small businesses. Although it was depleted not long after it became available.
Along with the closures came a huge rise in unemployment applications, leading to backlogs in state unemployment offices to the point that companies have developed apps to help people file more efficiently. Then there are the "thank you" ads that companies have been pumping into commercial slots across prime time, which have really worn on viewers' nerves over the last several weeks.
There's also been talk of a second stimulus package, namely the Emergency Money for the People Act, which was introduced by Democrats in the House of Representatives. The bill, if passed, would guarantee $2,000 a month to the bulk of Americans for six months. There had been some bipartisan support, including from President Donald Trump, though he shifted focus recently to promote a possible payroll tax cut instead.