JCPenney Files for Bankruptcy With Plans to Shutter Stores
The 118-year-old department store became the latest retailer to file for Chapter 11 during the coronavirus pandemic following J. Crew and Neiman Marcus.
By Nicholas Rizzi May 15, 2020 7:41 pm
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The 118-year-old department store JCPenney filed for bankruptcy today, the latest retailer to start Chapter 11 proceedings during the coronavirus pandemic.
As part of the filing, JCPenney secured $900 million in financing to reduce its heavy debt load and plans to permanently shutter some of its nearly 850 locations, the company said.
“The coronavirus pandemic has created unprecedented challenges for our families, our loved ones, our communities and our country,” Jill Soltau, the CEO of JCPenney, said in a statement. “As a result, the American retail industry has experienced a profoundly different new reality, requiring JCPenney to make difficult decisions in running our business to protect the safety of our associates and customers and the future of our company.”
The Texas-based retailer was already struggling to survive after years of declining sales and competition from online retailers. JCPenney lost money in eight of the past nine years — a total of $4.45 billion — while carrying a $4.2 billion debt load, the second-highest of any distressed retailer, USA Today reported.
JCPenney “made significant progress” turning the company around recently until the coronavirus pandemic forced it to close its locations, Soltau said in the statement.
The company has been teetering on bankruptcy for weeks and furloughed the majority of its retail employees and some corporate workers last month. However, it still paid out millions of dollars to four of its top executives as “please stay” bonuses this month, Observer reported.
JCPenney also recently missed two debt payments and failed to pay rent at 92 percent of its locations in May, as Commercial Observer previously reported.
As part of its bankruptcy plans, JCPenney plans to “reduce its store footprint” but did not say how many or which stores were on the chopping block.
Department stores have already faced a brutal decade in what some have dubbed a “retail apocalypse” before the spread of the coronavirus decimated their businesses.
Retail sales in the United States plummeted a record 16.4 percent between April and March — the largest drop since the government started keeping track in 1992 — with clothing stores seeing a jaw-dropping nearly 79 percent drop.
Preppy clothing retailer J. Crew became the first national clothing chain to file for bankruptcy during the pandemic this month with luxury retailer Neiman Marcus quickly doing the same. Lord & Taylor reportedly plans to liquidate all of its merchandise as soon as it’s able to reopen in preparation for a bankruptcy process it doesn’t plan to survive.
