JCPenney, the American retail giant with over 800 stores, filed for Chapter 11 bankruptcy on Friday, several weeks after The Wall Street Journal reported that the chain was in “advanced talks” to negotiate bankruptcy funding.
JCPenney announced the decision Friday in a statement, and pointed to the coronavirus pandemic as a source of recent challenges for the business, a staple of many shopping malls across the country.
“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,” said Jill Soltau, chief executive officer of JCPenney.
“While we had been working in parallel on options to strengthen our balance sheet and extend our financial runway, the closure of our stores due to the pandemic necessitated a more fulsome review to include the elimination of outstanding debt,” said Soltau.
According to The New York Times, JCPenney told the Southern District of Texas in a bankruptcy filing that the company currently had $500 million in cash reserves and had recently lined up $900 million in financing from lenders.
The company said it will continue to offer curb-side pickup at select locations and that the online store would continue to sell merchandise. However, the retailer also said it would undergo a “store optimization process,” which would involve closing stores throughout the bankruptcy process.
JCPenney did not indicate how many stores would be affected, or where these stores would be located, but said more information would be available in the coming weeks.
Retail Dive, a news site for industry developments and announcements, says that the fall of JCPenney can be arguably attributed to decisions made by former CEO Ron Johnson, who took hold of the company amidst a need for a “serious turnaround push.”
Under Johnson, Penney instituted a series of untested changes to its stores, merchandising and pricing. The transformation ultimately alienated customers and hammered its sales so badly that the company took on billions of dollars in new debt to fund losses…
Penney was already in need of a serious turnaround push when Johnson came aboard. Hence the drastic changes he made at the department store, which some argue might have worked given more time, better messaging, and certainly more testing and refining.
Since the beginning of the year, shares in the company have dropped from a high of $1.20 per share on January 8 to $0.24 per share on May 15.
As The Daily Wire previously reported, JCPenney furloughed the majority of its 95,000 employees in March, a move that many businesses have been forced to take as a result of coronavirus closures. As public health orders have been eased, the company has re-opened stores in some places such as Texas, Idaho, and Missouri. At this time, the future of those stores remains uncertain.
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