J. Crew Group on Monday said that it's received concessions from landlords of its namesake and Madewell stores, including one-time waivers and rent deferrals, adding up to about $70 million in savings this year and about $60 million next year, "assuming sales are in line with projections."
As of Sunday, the company has reopened 458 stores, or about 95% of its fleet, after temporarily shutting them due to the COVID-19 pandemic. "The vast majority" of its store workers have been reinstated, according to a company press release.
Separately, the committee of unsecured creditors last week claimed in bankruptcy court that J. Crew and its secured lenders "have grossly undervalued" the business while overvaluing certain collateral, "resulting in the shifting of value away from general unsecured creditors." The committee calculates the company's enterprise value to be $2.94 billion, not the $1.75 billion or even the upwardly revised $1.84 billion set forth in the company's bankruptcy plans, according to a court filing.
Before the apparel retailer's trek to bankruptcy court in May, a real estate shakeup was already underway, as the company continued to close J. Crew stores in favor of opening Madewell locations.
It's not clear whether that remains the plan. In previous weeks, the company sought the ability to exit its leases through the bankruptcy process, according to court documents. The company's COO said then that it was working with advisers to "optimize" its footprint, including closing stores.
The pandemic has forced several retailers in and out of bankruptcy, especially in apparel, to rethink the size of their fleets. But both J. Crew brands were in danger of being overstored before the disease outbreak further pressured their results, according to Lee Peterson, executive vice president of thought leadership and marketing at WD Partners. Peterson estimates the company's ideal footprint at about half of what it is now.
Last year, in the first quarter the company opened one J. Crew store and 10 Madewell stores, while initiating plans to shutter 20 J. Crew and factory stores. Representatives of J. Crew didn't immediately return requests for more information on whether or how the bankruptcy filing or the landlord negotiations have affected that blueprint, or how long reopened stores will ultimately stay open.
As of Monday, the J. Crew Group operates 178 J.Crew retail stores, 145 Madewell stores and 170 factory stores, per the release.