COVID-19 has caused numerous retail chains to close temporarily, including Apple, Macy’s and Nike. Here is a look at some of the closures.
J.C. Penney is considering filing for bankruptcy protection as the retailer grapples with the fallout from the coronavirus pandemic and its own long-in-the-making struggles.
The Plano, Texas-based company is exploring the possibility along with a range of other options, including out-of-court debt restructuring, according to a person familiar with the deliberations who was not authorized to speak publicly.
Reuters first reported Tuesday that J.C. Penney was considering the bankruptcy filing to “rework its unsustainable finances and save money on looming debt payments” in hopes of continuing operations.
With all of its stores temporarily closed due to the coronavirus, J.C. Penney is bleeding cash while it awaits the chance to get back on its feet.
“JCPenney 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,” the retailer said in a statement. “We remain focused on our Plan for Renewal, and look forward to when we reopen our doors.”
J.C. Penney has been ailing for years as consumers began losing interest in department stores and malls. One of its biggest rivals, Sears, filed for Chapter 11 bankruptcy protection in October 2018 and narrowly escaped liquidation.
USA TODAY on Tuesday listed J.C. Penney among 10 retailers that are fighting to stay alive during the COVID-19 outbreak.
“Before the coronavirus, I thought there was going to be some hope for J.C. Penney,” Camilla Yanushevsky, a retail stock analyst for CFRA Research, told USA TODAY for that report. “It did look like they had some good ideas brewing, but … this could be the final straw for them.”
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J.C. Penney, which still has about 850 stores, has the second-most debt of any distressed retailer at $4.2 billion, according to Moody’s Investor Service. The retailer ranks behind only luxury department store chain Neiman Marcus, which is also reportedly weighing bankruptcy.
S&P Global Ratings also ranks J.C. Penney as a distressed retailer with a credit rating of CCC and a negative outlook.
In 2019, J.C. Penney closed 27 stores, ended sales of appliances and furniture, and placed its focus back on its bread and butter: apparel and related merchandise.
In 2020, the chain has already announced six additional permanent closures.
Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.
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