J.Crew in trouble as bonds fall to 25.5 cents

J.Crew’s bonds have fallen to 25.5 cents on the dollar after having lost 60% of its value this year, becoming the worst- performing retail debt in the US. As recently as April, their bonds were trading that 90 cents on the dollar. After initial speculation that the J.Crew Group Inc. was considering going public, it seems that the company is suffering some serious blows to its comeback plan. Consequently, investors are becoming concerned.

Liz Dunn, chief executive officer of the consulting firm Talmage Advisors, explains that ““Their fashion isn’t particularly special right now, they still have some quality issues, and people aren’t buying apparel, and the weather’s not cooperating. I don’t think there are many apparel players that are going to stand out this holiday season — and J. Crew certainly isn’t one of them.”

Store sales have slumped in recent quarters, and the company has been forced to offer serious discounts to keep their prices competitive. The problem is that shoppers, especially young shoppers, prefer to splurge disposable income on cars or restaurants rather than tops and jeans. Combined with the recent restructuring of the brand’s products to a preppy-cool aesthetic, loyal customers are being alienated by the sudden change of branding.