They were already struggling as consumers shifted to online shopping, before the coronavirus infected more than half a million Americans, resulting in more than 23,000 deaths.J.C. Penney had recently made some strides in its turnaround attempt, meeting or exceeding guidance on financial objectives for 2019 and improving sales at some stores.
Penney attempted unsuccessfully to persuade creditors earlier this year to restructure and push out due dates on portions of its nearly $4 billion of long-term debt without the need for bankruptcy proceedings. JCPenney recently celebrated its 117th birthday, but its latest financial news has shoppers wondering how much longer the struggling department store chain will keep its doors open. Last week, peer Nordstrom said it borrowed $600 million against its real estate.
Penney “has been engaged in discussions with its lenders since mid-2019 to evaluate options to strengthen its balance sheet and maximize its financial flexibility, a process that has become even more important as our stores have also closed due to the pandemic,” a company spokeswoman said in a statement.The novel coronavirus outbreak threw a wrench in its plans. We've received your submission.The pandemic “has created unprecedented challenges,” she said, adding the company remains focused on its turnaround plan and looks forward to reopening stores.J.C. The retailer must also contend with about $300 million in annual interest expenses, and faces more than $2 billion of debt maturing in 2023, according to regulatory filings.J.C. Its online business is still running, though it does not contribute to the lion’s share of the company’s sales.Would you like to receive desktop browser notifications about breaking news and other major stories?Macy’s, the largest U.S. department store operator by sales, has tapped advisers at investment bank Lazard and law firm Kirkland & Ellis to explore options including new financing, Reuters reported this week. As part of its financial restructuring, it plans to close about 30 percent of its stores. The 118-year old company, which has had to furlough some of its roughly 85,000 employees and slash spending, is now considering skipping looming debt payments and filing for bankruptcy to address its debt, the sources said. JCPenney’s financial situation in the months leading up to its bankruptcy filing was much worse than originally thought. The retailer is also considering asking creditors for breathing room through transactions that would rework debt outside of bankruptcy court proceedings, the sources added.
On March 31, it said it was also “evaluating other financial options,” without providing further details.The sources spoke on condition of anonymity to discuss confidential deliberations.
Neiman Marcus Group, another department store operator, is advancing bankruptcy preparations, Reuters reported earlier this month.J.C. Penney has not made any final decisions on how to address its strained finances, the sources said. We may earn commission on some of the items you choose to buy. May 28, 2020 – JCPenney Reopens 150 Additional Stores Across U.S. with Emphasis on Safety Precautions and Engaging Shopping Experiences COMPANY June 4, 2020 – JCPenney Receives Court Authorization to Access Debtor-In-Possession Financing
Press Release JCPenney to Reduce Debt and Strengthen Financial Position Through Restructuring Support Agreement Published: May 15, 2020 at 6:22 p.m. JCPenney's financial situation in the months leading up to its bankruptcy filing was much worse than originally thought.
ET Implementing the financial restructuring plan, with the support of our first lien lenders, is the best path to ensure JCPenney will emerge stronger JCPenney will continue to be one of the nation’s largest apparel and home retailers with an expansive footprint of hundreds of stores with a powerful eCommerce flagship store, jcp.com
Last Friday, JCPenney became the latest U.S. retailer to file for bankruptcy. Penney in March drew down $1.25 billion from its revolving credit line.
The credit ratings firm predicts that could cause J.C. Penney’s earnings before interest, taxes, depreciation and amortization to turn “materially negative” to the tune of $400 million in 2020.J.C. J.C. Penney bonds due in 2023 were trading at roughly 43 cents on the dollar on Tuesday, according to Refinitiv Eikon data, indicating investor concerns about the company’s ability to repay its debts.Thanks for contacting us. There is also a possibility that J.C. Penney will be able to secure rescue financing, one of the sources said.The coronavirus outbreak has hammered traditional brick-and-mortar department store operators and other retailers that had to close their doors to customers to curb its spread. The company has been reducing inventory and refocusing on its core higher-margin business of selling mid-priced apparel to middle-class families.J.C.
The two property companies have already bought one bankrupt clothing chain in 2020. Penney needs to make a debt payment of roughly $12 million on Wednesday, followed by a $105 million bond repayment due in June. Jan. 23, 2020 – JCPenney to Host Analyst Day on April 7, 2020 FINANCIAL Jan. 9, 2020 – JCPenney Reports Holiday Sales and Reaffirms Fiscal Year 2019 Guidance