- [Narrator] During the 2008 presidential campaign,
Michelle Obama was asked on "The Tonight Show"
about the cost of her wardrobe.
- [Jay] 60, 70,000 for that outfit?
- Actually, this is a J. Crew ensemble.
- Really, wow.
- [Narrator] J. Crew clothing would become a staple
in the former first lady's wardrobe,
elevating the brand's image from preppy basics
to professional, yet affordable chic, but recently,
the apparel brand has struggled with slumping sales
and a debt load that ultimately led the retailer
to seek bankruptcy protection.
In court filings, the company cited losses incurred
because of coronavirus lockdowns,
but analysts say the brand also lost touch with consumers
with styles that appeared more suited
for the runway than for everyday life.
Here's how J. Crew filed for bankruptcy.
J. Crew, formerly known as Popular Merchandise, Inc.,
emerged in 1983 as a catalog-only retailer.
It offered a pioneering line of casual fashion
built on affordable weathered chinos
and simple crew neck t-shirts.
- Well, they were really the preppy chic brand,
sort of preppy with a twist,
the kind of clothes that, you know,
you could wear to the office,
but also the perfect weekend clothes.
- [Narrator] The brand opened its first
retail store in 1989, and over the next decade,
found its home in malls across the country.
Many of the brand's styles can be attributed to Jenna Lyons
who was first hired as a designer in 1990.
Her design influence grew the brand by attracting both
luxury and middle-class customers.
Former Gap CEO Mickey Drexler joined the company in 2003
and promoted Lyons to creative director a few years later.
- Mickey Drexler was best known for turning Gap
into a cultural icon in the 1990s.
He came to J. Crew and sort of had a second act,
and Jenna Lyons was sort of his creative
right-hand woman, so to speak,
to turn things like sequins which you would think
were that you'd only were sort of out on a Saturday night.
All of a sudden, you could wear them during the day,
and she kind of really glammed up the brand.
- [Narrator] In 2006, Drexler founded
the successful companion brand Madewell.
J. Crew also with public that same year
only to be taken private again five years later
in a leveraged buyout that saddled the company with debt.
Not too long after, sales began to flag.
Starting in 2014, J. Crew experienced six straight years
of losses, and the company started looking for ways
to cut back and attract new customers.
- Well, they started to get a bit too glam,
and this is where some of the critics
started blaming Jenna, that her style became too Brooklyn
for their kind of J. Crew's mainstream customers,
and then on top of that,
they ended up with quality and fit problems.
The quality became inconsistent.
Customers kind of just lost faith in the brand.
- [Narrator] In 2017 with the company still floundering,
Lyons departed, and Drexler stepped down as CEO,
and the brand narrowly avoided bankruptcy as part of
a controversial debt swap that moved
its intellectual property beyond the reach of creditors.
- They were just caught a little bit flat-footed
and didn't act fast enough to, you know,
develop e-commerce, to develop all the things now
that we sort of expect from a retailer.
- [Narrator] Heading into 2020,
J. Crew planned to raise cash by spinning off
its Madewell chain through an IPO,
but plans came to a halt as coronavirus lockdowns
forced the retailer to close some 500 stores.
In court filings, the brand said it expected to lose
$900 million in sales because of lockdowns
putting it in a position where it couldn't pay its debts.
On May 4th, 2020 J. Crew filed for bankruptcy.
- You know, J. Crew has a smaller footprint
than a lot of other retailers, and they didn't overexpand,
so that's a positive for them.
They are in a position where they're not gonna probably
have to close hundreds of stores,
and they also have a new CEO, and you know,
her mission was sort of to restore the brand
to its former glory, getting back to the quality
and the fit that the customers loved
and kind of the classic styles.
- [Narrator] As the retailer looks to navigate its way
out of bankruptcy, it will also try to recapture customers
who once looked for clothes that could be worn
on any occasion, even inauguration day.
(people cheering) (anxious music)