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J. Crews Madewell brand files to go public



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

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

The denim brand said they plan to use the money raised in the IPO "to repay debt and for general business purposes."

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

Madewell is the crown jewel of parent company J. Crew, who has continued to struggle with declining sales. For the second quarter, J. Crew reported a net loss of $ 44.2 million, compared to the loss of $ 6.2 million a year ago. The brand name reported that sales fell nearly 7% year-on-year to $ 399.1

million. However, Madewell reported that sales grew nearly 15% to $ 139.7 million in the same period – or about 24% of the parent company's revenue for the quarter.

Madewell, known for its popular denim lines and elegant universal basics, has smaller footprints of brick and mortar than the J. Crew brand. The brand said it had 132 stores as of August 3, compared to J. Crew's 365 locations. Madewell said that e-commerce sales accounted for 40% of revenue directly to consumers in the first half of fiscal 2019.

J. Crew has reportedly been investigating several alternatives to turning its abrasive business, including spinning off Madewell. Earlier this year, Reuters reported that J. Crew hired restructuring lawyers to explore options to restructure the $ 1.7 billion debt load.


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