J.Crew’s Madewell Brand Files to Go Public
J.Crew announced last week that it has filed documents with regulators to prepare for an initial public offering for its fast-growing denim brand, Madewell. According to the filing with the SEC, Chinos Holdings, J.Crew's subsidiary, will be renamed Madewell before the IPO. The company didn't disclose the size of the offering or its target price range, but said it plans to use the money raised in its IPO “to repay indebtedness and for general corporate purposes." J.Crew carries a debt load exceeding $1.7 billion, according to a Reuters report. Madewell, on the other hand, has been growing steadily. While it has a smaller brick-and-mortar footprint than the J.Crew brand, it has opened four new stores this year and is planning to open about six more by February 2020. E-commerce sales represented 40 percent of Madewell's direct-to-consumer revenue in the first half of fiscal 2019.
Total Retail's Take: Madewell filing for an IPO doesn't come as a surprise. As we reported in April, J.Crew was considering bringing its Madewell business to the public markets as soon as the second half of this year to deleverage some of its hefty balance sheet. Since it has connected with younger shoppers in a way that the parent brand, J.Crew, has been unable to do, Madewell became an attractive target for potential investors. J.Crew said the move is a part of its initiative to “maximize value, position both the J.Crew and Madewell brands for long-term growth, and deleverage and strengthen the company’s balance sheet.” J.Crew’s top priority this year is to return its flagship brand to profitability and sustain momentum for its quickly growing Madewell apparel business.