Privately held Chinos Holdings plans to spin off its Madewell premium denim chain, following the IPO of Levi Strauss (NYSE: LEVI) and the spinoff of Kontoor Brands (NYSE: KTB) from VF Corp.
But where the public debut of Madewell's rivals initially found favor with the markets, they haven't really fared well since, with their stocks down from the price they opened at. Many retail fashion stocks that also went public over the past year have stumbled badly, leading to online used-clothing marketplace Poshmark to recently pull its planned IPO.
Chinos is operating from a position of weakness, with its flagship J. Crew brand teetering on the edge of bankruptcy due to substantial debt, which is listed as one of the risks of a Madewell offering. It suggests Chinos may not have many choices about the timing of the IPO. Coupled with an overall weak denim market, investors may want to wait a while to see whether Madewell will make it.