The struggling J. Crew Group Inc., seeking to cut debt and better position its divisions for the future, said it is reviewing strategic alternatives for the company, including a possible Madewell initial public offering.

J. Crew said Thursday if the Madewell IPO is pursued, it could be completed as early as the second half of 2019. Word on the street is that Madewell could be valued at around $1.5 billion to $2 billion. Madewell sales last year increased 26 percent to $529 million; comparable sales increased 25 percent.

If Madewell did go public, it would help pay down J. Crew Group’s huge debt, which is around $1.67 billion, satisfy creditors and take some pressure off of management.

There’s also been a shake-up in the executive suite. Michael J. Nicholson, president and chief operating officer, has been named interim chief executive officer of the J. Crew Group. The company has been searching for a ceo since the departure last November of Jim Brett, who left amid disagreements with the board and disappointing results with merchandise sales. J. Crew Group is likely to seek a merchant ceo in the future, but it is believed the company hasn’t been able to attract suitable candidates, largely because of its financial condition.

Adam Brotman, president and chief experience officer, has decided to resign from his position “for personal reasons” on April 19.

While the J. Crew division continues to flounder, Madewell has been showing steady growth, resonating with consumers with its denim-based casual offerings. Madewell was founded by Millard “Mickey” Drexler in 2005 while he was chairman and ceo of the J. Crew Group, putting the brand on its growth trajectory.

The decision by the group to consider a Madewell IPO is part of a trend in the industry to separate successful retail assets from those that are lagging to provide more value to shareholders and shine a brighter light on what’s working.

In February, Gap Inc. revealed plans to spin off Old Navy, also founded by Drexler, into a separate public company, while the Gap, Athleta, Banana Republic, Intermix and Hill City divisions will comprise another separate public company. Old Navy has been a cash cow for Gap Inc., Athleta has been on a growth path, but Gap and Banana Republic have been troubled for many years.

Unlike J. Crew Group, which has heavy debt, Gap Inc. still has a healthy balance sheet.

In another example, the VF Corp. this month began the process of spinning off its jeans business, which includes Wrangler, Lee and Rock & Republic, and its outlet business into a separate entity called Kontoor.

Nicholson’s appointment at J. Crew Group replaces the office of the ceo, which had four executives leading the company since Brett’s departure.

Libby Wadle will continue as president and ceo of Madewell, and Lynda Markoe will continue as the chief administrative officer of the company. Nicholson and Wadle will report to the board.

Wadle was recently rewarded with the title of ceo of Madewell, sending a signal that the company is confident in her abilities to continue steering the division. It is believed that she has not been in the running to be ceo of the overall J. Crew Group. Wadle, Nicholson, Markoe and Brotman comprised the office of the ceo.

“Today’s announcement regarding the decision to review strategic alternatives reflects our continued focus on maximizing the value of our company and our conviction in Madewell’s long-term growth potential, which we believe will further enhance our financial flexibility to support a turnaround at J. Crew,” said Chad Leat, J. Crew Group’s chairman.

“The board is confident in Mike’s ability to lead the company in this dynamic retail environment during this transition period. His appointment reflects the key role he has played leading the company and directing strategies positioned to improve performance and maximize value,” he said.

“On behalf of the board, we would like to thank Libby, Lynda, Adam and Mike for their leadership during this transition period, and we thank Carrie for her leadership and dedication to the company on the board of directors,” Leat continued. “We wish Adam the best in his future endeavors, and we look forward to Mike’s leadership during this important time for the company and to Libby and Lynda’s continued contributions.”

Nicholson commented, “I look forward to working with the board of directors and our team to build on the decisive actions we have taken to date to refocus our strategy and improve performance in 2019 with the goal of returning J. Crew to profitability, while working with Libby to continue the strong growth at Madewell.

“We believe a potential IPO of Madewell, which had another record year of performance in 2018, could unlock significant value and generate meaningful proceeds that would strengthen our balance sheet and increase our overall financial flexibility to address our 2021 debt maturities, giving us an improved platform to support J. Crew’s turnaround and allowing Madewell to achieve its full potential over the long term.”

Nicholson joined J. Crew in 2016 as president, chief operating officer and chief financial officer. Prior to joining J. Crew, he was at Ann Inc., most recently as executive vice president, chief operating officer, cfo and treasurer, and before that he held leadership positions at Limited Brands Inc. and Victoria’s Secret Beauty. Earlier in his career, Nicholson held senior positions at Colgate Palmolive and Altria Group Inc.

Weingart is the comanaging partner of TPG Capital, TPG’s U.S. and European private equity platform with about $35 billion of assets under management. Prior to joining TPG in 2006, Weingart was a managing director at Goldman, Sachs & Co., responsible for managing the firm’s West Coast leveraged finance and financial sponsor business.

Misguided strategies by Brett of the past year that led to inventory writedowns dragged the J. Crew Group to a net loss of $74.4 million in the fourth quarter, compared with net income of $34.7 million in the year-ago fourth quarter.

Nicholson said at the time of the report that Madewell had strong results last year and is on a path to becoming a $1 billion global brand. Madewell sales in the fourth quarter increased 16 percent to $157.9 million. Comparable sales increased 22 percent following an increase of 19 percent in the fourth quarter last year.

The company was beset by issues at the J. Crew brand, mainly a confusing subbrand strategy that was dropped, inventory increases and exaggerated marketing and overhead expenditures. J. Crew sales in the fourth quarter decreased 4 percent to $527.9 million. J. Crew comparable sales increased 6 percent following a decrease of 7 percent in the fourth quarter of last year.

Not all of the new J. Crew strategies flopped. Nicholson cited as accomplishments the point-based loyalty program, growth in wholesaling and a healthier inventory position entering 2019.

For 2018 overall, J. Crew Group had a net loss of $120.1 million compared to a net loss of $123.2 million in 2017. Adjusted earnings before interest, taxes, depreciation and amortization were $112.8 million, compared to $225.9 million in the year prior.

Total revenues increased 5 percent to $2.48 billion; comparable sales increased 6 percent. J. Crew sales decreased 4 percent to $1.78 billion; comparable sales increased 2 percent.

J. Crew Group operates 200 J. Crew retail stores, 131 Madewell stores,,, and 173 factory stores.

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