JCPenney will close 30% of its 846 stores after filing for bankruptcy amid the coronavirus pandemic
- JCPenney will permanently close nearly 200 of its 846 stores – or about 30 percent – across the US as part of its bankruptcy plans
- It is not yet clear how many of the company’s 85,000 employees will lose their jobs as a result
- The company, which has not turned a profit since 2011, is the latest American retailer to be pushed into bankruptcy by the coronavirus pandemic
- It announced late on Friday it was filing for Chapter 11 – a mechanism that allows a company that can no longer pay its debts to restructure
- Here’s how to help people impacted by Covid-19
JCPenney will be closing nearly 30 percent of its 846 stores across the United States as part of a restructuring after filing for bankruptcy amid the coronavirus pandemic.
The retailer said Monday that it plans to close about 192 stores by February 2021 and then 50 additional stores in the year after that.
That would leave the company with just over 600 stores.
It is not yet clear how many of the company’s 85,000 employees will lose their jobs as a result.
The 118-year-old department store, which has not turned a profit since 2011, is the latest American retailer to be pushed into bankruptcy by the coronavirus pandemic.
The iconic business, based in Plano, Texas, announced late on Friday it was filing for Chapter 11, a mechanism that allows a company that can no longer pay its debts to restructure.
JCPenney will be closing nearly 30 percent of its stores across the United States after filing for bankruptcy amid the coronavirus pandemic
The company said it has $500 million in cash and has received financing commitments of $900 million from lenders.
The company missed a debt interest payment in April, fueling rumors of an impending bankruptcy.
‘The Coronavirus (COVID-19) pandemic has created unprecedented challenges for our families, our loved ones, our communities, and our country,’ CEO Jill Soltau in a statement.
‘The American retail industry has experienced a profoundly different new reality, requiring JCPenney to make difficult decisions in running our business.
‘Until this pandemic struck, we had made significant progress rebuilding our company… 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.’
JC Penney’s online sales have not been enough to compensate for the significant losses it has incurred while keeping stores closed across the US in response to lockdowns aimed at curbing the spread of the coronavirus.
Retail sales plunged a record 16.4% in April – more than the 12% predicted – amid the coronavirus pandemic
While the company has enough cash to survive in the coming months, it faces a $105million debt payment due in June and about $300million of annual interest expenses.
More than $2billion of debt comes due in 2023.
Founded in 1902 in Wyoming by James Cash Penney, the chain survived the Great Depression and established itself in the second half of the 20th century as an anchor of giant suburban shopping malls, then symbols of American consumerism.
But – like clothing company J.Crew and department store Nieman Marcus, which have also filed for bankruptcy since the pandemic began – it has struggled for years.
Its decline began a decade ago with the advent of online shopping and the rise of Amazon as well as trendy, cheap chains like H&M and Zara.
In February, JCPenney had about 90,000 employees and nearly 850 stores in the United States, according to documents provided to the US Securities and Exchange Commission (SEC).
The company plans to reduce its number of stores in stages as part of its comprehensive restructuring plan.
It reported sales of $10.7 billion in 2019, a decrease of more than $7 billion in 10 years.