The Denim Brand Madewell Will Be Listed And Valued At $2 Billion.

According to sources, in the face of slower growth, J.Crew Group Inc. accelerated the stripping of Cowboy brand Madewell, and has hired Goldman Sachs, Bank of America and big and small Moldova as underwriters, responsible for Madewell's IPO matters, with a view to reducing group debt.

J.Crew Group Inc. announced in April that it is actively exploring the strategic options, including the initial completion of Madewell initial public offerings in the second half of 2019, so as to maximize the overall value of J.Crew Group Inc. and reduce debt levels to strengthen the balance sheet.

The first quarter results released at the end of May showed that the overall growth of J.Crew Group Inc. in the first quarter was 1% higher than that in the same period last year. The difference is that the J.Crew brand in the current fiscal year reversed 6% decline in the same period last year, rising 1% year on year, while Madewell rose to 31% from 10% in the same period last year, a two-and-a-half year low.

Michael Nicholson, the acting chief executive, said at the first quarter analyst conference call that the plan for Madewell IPO remained unchanged and stressed that the transaction helped the group repay its debts due in 2021, thereby improving financial flexibility. As of May 4th, the total debt of J.Crew Group Inc. was US $1 billion 704 million 200 thousand, which was basically unchanged from US $1 billion 711 million 400 thousand in the same period last year.

According to sources, Madewell's valuation is expected to exceed $1 billion 700 million in total debt, but J.Crew Group Inc. will not fully sell its holdings.

J.Crew Group Inc. earned $2 billion 484 million last year, of which about 20% contributed by Madewell. In the first quarter of May 4th, the total revenue of the group was 578 million 500 thousand US dollars, up 7% from 540 million 500 thousand US dollars in the same period last year. J.Crew brand revenue declined by 4% to 376 million 100 thousand US dollars annually, while Madewell increased 14.7% to 132 million 900 thousand US dollars, accounting for a further increase from 23% in the same period last year to 23%.

As SG&A expenditure fell sharply by 440 basis points to 32.8%, J.Crew Group Inc. achieved a profit of 22 million 100 thousand dollars in the first quarter, and a 900 thousand dollar loss in the same period last year. The net loss also narrowed to $16 million 200 thousand from $33 million 900 thousand in the same period last year.

The Levi s s parent company Levi Strauss & Co. (NYSE:LEVI) gained ten times oversubscribed in IPO at the end of March, raised the issue price and issued a 31.8% rise in March 21st, reflecting the enthusiasm of investors in the industry.

However, this week's two quarter results warned that the growth rate slowed down in the second half of the year, and the share price of Levi Strauss & Co. suffered a heavy setback, but the company's stock price is still about 20% higher than the $17 stock price.

In 2017, when J.Crew Group Inc. was on the verge of bankruptcy, creditors who were very angry about transferring J.Crew brand intellectual property welcomed the decision to split Madewell. It is reported that creditors can request the group to use IPO proceeds to repay 1 billion 400 million dollars of loans, if the transaction is successful, J.Crew Group Inc.'s liabilities are expected to be reduced to $347 million, when management can invest more cash to accelerate the revival of J.Crew brand.