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J.Crew High Yield Bond Debt Slips In Trading After Company COO Resigns

J.Crew bonds shed more than point today after it was reported that its chief operating office and interim chief financial officer, James Scully, has left to join Avon. Scully's departure follows that of Stuart Haselden, chief financial officer, who resigned on Jan. 2, according to filings.

Scully effectively resigned on Jan. 22, J.Crew stated in an 8K filing released yesterday. Joan Durkin, chief accounting officer will serve as interim chief financial officer, and the company stated it has already engaged a search firm to identify a permanent chief financial officer. Stuart Haselden left to serve as chief financial officer at Lululemon.

The 7.75% notes due 2019 traded at 86.25 early this afternoon, versus 87.75 yesterday and an 87/88 quote this morning, according to trade data and sources. The notes are now offered at 86, with no bid, according to a source. "There's a bit of price discovery in the mid-80s," he said.

In the loan market, the retailer’s covenant-lite term loan due 2021 (L+300, 1% LIBOR floor) is quoted about a point lower on the news, at 91/92, sources said. The term loan, originally $1.567 billion, was issued at 99.5 in February 2014, proceeds of which were used to refinance debt. Bank of America Merrill Lynch is administrative agent.

J.Crew’s debt tumbled in December after the company missed on third-quarter earnings. Net revenue increased 6% in the quarter, to $655 million, though comparable company sales decreased 2%, according to corporate filings. Results turned out adjusted EBITDA of $80.9 million in the quarter, down from $110.4 million in the year-ago period, the filings show.

Analyst estimates were generally at either side of the $100 million EBITDA mark.

J.Crew also reported a third-quarter net loss of $607.8 million, due to non-cash impairment charges, versus net income of $35.4 million a year earlier. 

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