J.Crew's 'crown jewel' Madewell files for an IPO

Business Insider/Jessica TylerMadewell has filed to go public.
  • Madewell filed to go public on Friday, a process that would split the company from its sister brand, J.Crew.
  • CEO Libby Wadle said in a filing with the SEC that Madewell will focus on “driving outsized growth in e-commerce, expanding our product range and further developing our membership program.”
  • The IPO could garner a substantial valuation, which would assist J. Crew in paying off its more than $US1.7 billion in debt, according to Moody’s analyst Raya Sokolyanska.
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Madewell has filed to go public, a process that would split the company from J.Crew.

On Friday, Madewell’s parent company Chinos Holdings, Inc. filed for an initial public offering.

Earlier this year, J.Crew announced plans to explore an IPO of its Madewell division. Currently, Chinos Holdings is divided into the Madewell and J.Crew business, with Madewell accounting for roughly 20% of the company’s business.

“In some ways, we will continue on as we have – growing organically and authentically, with our customers at the centre of every decision we make,” CEO Libby Wadle 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,” Wadle continued.

The filing cites 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.

“While J.Crew continues to struggle, Madewell has emerged as the company’s crown jewel, accounting for the majority of profits,” Raya Sokolyanska, vice president senior analyst at Moody’s, said in an emailed comment on Friday.

“The IPO could garner a substantial valuation and help pay down a meaningful portion of the over $US1.7 billion in debt, but the ultimate ability to address J.Crew’s highly leveraged capital structure depends on the public market’s receptivity to apparel retailers and the company’s operating performance,” Sokolyanska added.

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