J.CREW’S MADEWELL BRAND FILES TO GO PUBLIC

by MR Magazine Staff Sep 16, 2019
Madewell Men's

J.Crew will spin off its fast-growing denim brand Madewell, according to a Friday filing with the SEC.

The company said Chinos Holdings, its subsidiary, will be renamed Madewell before its initial public offering. The company did not disclose the size of the offering or its target price range.

The filing does cite, however, risk factors including the possibility of a bankruptcy filing from J.Crew, negative social media posts, and declining mall traffic. Roughly half of Madewell locations are currently located in shopping malls.

The denim brand said it plans to use the money raised in its IPO “to repay indebtedness and for general corporate purposes.”

Madewell reported $614 million in 2018 revenue, according to the filing. The company said that 87 percent of its sales are direct to consumers.

Madewell is the crown-jewel of parent company J.Crew, which has continued to struggle with declining sales. For the second quarter, J.Crew reported a net loss of $44.2 million, compared to the $6.2 million loss a year ago. Its namesake brand reported that sales declined nearly 7 percent year over year to $399.1 million. Madewell, however, reported that sales grew almost 15 percent to $139.7 million in the same period — or about 24 percent of the parent company’s revenue for the quarter.

Madewell, known for its popular denim lines and basics, has a smaller brick-and-mortar footprint than the J.Crew brand. The brand said it had 132 stores as of August 3rd, compared with J.Crew’s 365 locations. Madewell said its e-commerce sales represented 40 percent of its direct-to-consumer revenue in the first half of fiscal 2019.

“In some ways, we will continue on as we have — growing organically and authentically, with our customers at the center of every decision we make,” Libby Wadle, CEO of Madewell, said in the filing. “But we will also focus on considerable growth through new opportunities, including driving outsized growth in e-commerce, expanding our product range and further developing our membership program.”