On Monday, JCPenney (NYSE: JCP) announced to close their 154 stores this summer. The fashion firm filed for Chapter 11 bankruptcy protection on Friday, May 15.
On Friday, May 15 Company announced to make the interest payment of their senior secured loan which is approximately $17 million. Penney had a grace period of 5 business days to make its May 7 interest payment.
“These are difficult days all across the country and the globe. At J.C. Penney, we are making tough, prudent decisions to protect both the safety of our associates and the future of our company. While closing stores is always an extremely difficult decision, our store optimization strategy is vital to ensuring we emerge from both Chapter 11 and the COVID-19 pandemic as a stronger retailer with the greater financial flexibility to allow us to continue serving our loyal customers for decades to come,” Chief Executive Jill Soltau said in a statement.
As JCPenney is declared bankrupt, the company hearing set to take place on June 11 and it has decided to start its closure sales by June 12. Also, the company expects the closing sales to end within 10 to 16 weeks.
As stated earlier, the company decided to permanently shut almost 30% of its 846 stores. The company planned to close 192 stores by February 2021 and the other 50 stores in the year 2020.
The list of 154 stores released on Thursday, June 4. Here’s the complete list of 154 stores.
Net store sales of the company dropped around $9.2 billion in fiscal 2019 about $7.5 billion. The company same-store sales decreased by 7.5% over a nine-week period that ended on Jan. According to a poll by Refinitiv, same-store sales to fall 7.4% during the fourth quarter.
JCPenney Company’s financial results for its fiscal quarter and the full-year period ended Feb. 1, 2020:
Key highlights of Fourth Quarter:
- 0% decrease in comparable-store sales.
- 7% decrease in the adjusted comparable store sales.
- Cost of goods sold up by around 200 basis points over the prior year.
- Net income of $0.08 per share, adjusted net income of $0.13 per share.
In Fiscal 2019, the company met its exceeded all five financial guidance metrics for the year, and they delivered their third consecutive quarter of gross-margin improvement in the fourth quarter.
Comparable Sales Change (Source: Business Quant)
Bankruptcy and Layoffs:
The company has temporarily laid off 85,000 employees, including store hourly workers and many corporate staff members in Plano. Store salaried employees, warehouse, and logistics employees were also included in the layoff. The employees who are staying on are in the online part of the business. Although, it was not clearly known how many workers would be impacted by the closure step of the company.
Employees Statistics (Source: Business Quant)
Penney struggled with weak sales and heavier competition from discounters and speciality chains that were squeezing its business from both ends. Penney’s began flirting with bankruptcy nearly a decade ago when a disastrous reinvention plan.
The coronavirus (COVID-19) pandemic has created enormous challenges globally. Many companies try to cope up with the loss of pandemic by taking difficult decisions for their organizations. Likewise, JCPenney struggled to recover from their losses and debt but wasn’t able to do so. Since people prefer online shopping to avoid exposing themselves to the virus.
JCPenney Company, Inc. one of America’s largest apparel and home retailers, with 846 locations in 49 Unites States and Puerto Rico. Company’s mission is to help customers find what they love for less time, money, and effort.