J. Crew is the first major retailer to file for bankruptcy under COVID-19
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J. Crew has entered bankruptcy protection, the first major retail chain to do so during this COVID-19 era. The company is restructuring its debt — it has almost $1.7 billion worth.
J. Crew announced Monday morning that it’s reached a deal to turn over the keys to its lenders. They’ll take control of the company.
The company says its online operation will continue as usual, and that it still plans to reopen the stores of both J. Crew sand Madewell, which is a brand the company also owns, as pandemic shutdowns ease.
It’s difficult to predict where other brands might be headed, even as COVID-19 restrictions ease further. Look at Sears: It went into bankruptcy and came out the other side. It’s smaller and has fewer stores, but it’s still around.
Sales are, however, down across retail. They took a historic downturn — dropping almost 9% — in March, and that’s when stores were still open at least some part of the month.
Analysts expect other retail bankruptcies coming from brands that were already struggling pre-pandemic. J. Crew is one of them — sales were down 4% last year.
Other brands analysts are watching include J.C. Penney, the luxury retailer Neiman Marcus and GNC, the nutrition supplements store.
COVID-19 Economy FAQs
What do I need to know about tax season this year?
Glad you asked! We have a whole separate FAQ section on that. Some quick hits: The deadline has been extended from April 15 to May 17 for individuals. Also, millions of people received unemployment benefits in 2020 — up to $10,200 of which will now be tax-free for those with an adjusted gross income of less than $150,000. And, for those who filed before the American Rescue Plan passed, simply put, you do not need to file an amended return at the moment. Find answers to the rest of your questions here.
How long will it be until the economy is back to normal?
It feels like things are getting better, more and more people getting vaccinated, more businesses opening, but we’re not entirely out of the woods. To illustrate: two recent pieces of news from the Centers for Disease Control. Item 1: The CDC is extending its tenant eviction moratorium to June 30. Item 2: The cruise industry didn’t get what it wanted — restrictions on sailing from U.S. ports will stay in place until November. Very different issues with different stakes, but both point to the fact that the CDC thinks we still have a ways to go before the pandemic is over, according to Dr. Philip Landrigan, who used to work at the CDC and now teaches at Boston College.
How are those COVID relief payments affecting consumers?
Payments started going out within days of President Joe Biden signing the American Rescue Plan, and that’s been a big shot in the arm for consumers, said John Leer at Morning Consult, which polls Americans every day. “Consumer confidence is really on a tear. They are growing more confident at a faster rate than they have following the prior two stimulus packages.” Leer said this time around the checks are bigger and they’re getting out faster. Now, rising confidence is likely to spark more consumer spending. But Lisa Rowan at Forbes Advisor said it’s not clear how much or how fast.
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