UPDATE: JCPenney will close 242 stores, representing about 29% of its locations, according to Bloomberg. The first 192 closures will happen in fiscal 2020, which ends Jan. 30, 2021, followed by the closure and sale of 50 additional stores in 2021, according to documents filed in bankruptcy court. JCPenney is scaling down physical operations as part of a plan to grow e-Commerce sales to $2.3 billion by 2024, up from $1.5 billion in 2019.
JCPenney has filed for Chapter 11 bankruptcy protection and entered a restructuring support agreement with lenders holding approximately 70% of its first lien debt. The company plans to reduce its debt by several billion dollars and improve its financial flexibility, to help it navigate through the COVID-19 pandemic and beyond.
The department store retailer also has received court approval to access approximately $500 million in cash collateral to continue paying non-furloughed associate wages, provide certain benefits to all associates, and pay vendors in ordinary course for all goods and services provided on or after the Chapter 11 filing date. The company also is seeking authorization to access the $900 million in debtor-in-possession financing that it received from its existing first lien lenders, which includes $450 million of new funding.
The retailer will continue reopening select stores and offering contact-free curbside pickup at all open locations during the bankruptcy proceedings. It also will continue fulfilling online orders and operating customer care centers.
The coronavirus crisis was the tipping point for JCPenney, which had been struggling even before social distancing caused a massive drop in retail sales.
“The COVID-19 pandemic has created unprecedented challenges for our families, our loved ones, our communities, and our country,” said Jill Soltau, CEO of JCPenney in a statement. “As a result, 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. Until this pandemic struck, we had made significant progress rebuilding our company under our Plan for Renewal strategy — and our efforts had already begun to pay off. 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.”