J.C. Penney filed for bankruptcy and would close some branches

J.C. Penney Co. Inc. (JCP.N) filed for bankruptcy and announced that it may permanently close some of its branches. He even said that he is evaluating the possibility of selling the business, which would make it the fourth large retailer to fall apart amid the crisis caused by the coronavirus in the United States, for which many stores decided to close their doors.

“The pandemic created unprecedented challenges for our families, loved ones, communities and our country, ” Penney CEO Jill Soltau said in a statement.

“As a result, the United States retail sector experienced a profoundly different new reality, which forces J.C. Penney to make difficult decisions in the management of our business in order to protect our partners and customers, and the future of our company, ” he added.

The American chain, known for selling clothing, cosmetics and jewelry in approximately 850 storesHe said he reached an agreement with existing lenders for $ 900 million.

This money would allow the company to maintain operations while going through bankruptcy proceedings in federal court in the city of Corpus Christi, located in the state of Texas.

The loan consists of a new financing of US $ 450 million, which is added to the existing debt facing the company. From the retailer they added that they had $ 500 million Cash available prior to filing for bankruptcy.

New strategy

Despite J.C. Penney aims to reorganize his business and eliminate the debt he has today to avoid bankruptcy, he will also explore the alternative of making a sale of the business.

The company announced that it will follow a phased strategy, and that it could start with close some stores. In addition, he anticipated that more details of his strategy will be known in the coming weeks.

J.C. Penney is a 118-year-old company that it came to operate in more than 1600 locations and employ almost 200,000 people. Anyway, its decline predates the outbreak of the coronavirus: even before the Covid-19 outbreak, the company was struggling with a debt of almost $ 4 billion and the pressure of brands with huge discounts and online sales.

The pandemic dramatically reduced US retail consumption.

Pessimism

Many experts are pessimistic about Penney’s survival, even when she gets rid of her debt and reduces the number of her stores. Its fashion and home offerings have not stood out for years. Plus, its lower-middle-income customers have been hit hardest for the mass layoffs during the pandemic. Many of them are likely to buy more at discount stores, if at all, analysts say.

“This is a long and sad story,” said Ken Perkins, president of Retail Metrics, a retail research firm. “Penney offers no reason to shop there compared to its competitors, whether it’s Macy’s or T.J. Maxx or Walmart. How are they going to survive?

Like many department stores, Penney is struggling to remain relevant in an age when Americans shop more online or at discount stores. Sears has now been whittled down to a couple hundred stores after being bought by hedge fund billionaire and former bankrupt President Eddie Lampert in early 2019. Barneys New York closed its doors earlier this year and Bon -Ton Stores closed in 2018.

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