On June 12, JCPenney will begin permanent closures of 154 stores, “following a comprehensive evaluation of its retail footprint and a careful analysis of store performance and future strategic fit for the company,” the retailer announced. This first phase of closures is expected to take 10 to 16 weeks to complete.
Additional rounds of closings will launch in the coming weeks. The retailer, which operated 846 stores prior to its Chapter 11 bankruptcy filing, said earlier it would shutter 192 locations during its fiscal year ending Jan. 30, 2021, and 50 additional stores in 2021.
JCPenney listed the affected locations on its blog. The stores are located in 38 states, with the largest number of closings — nine each — in Florida, Indiana and Ohio, followed by eight in California and seven each in Georgia, New York and Texas.
“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 greater financial flexibility to allow us to continue serving our loyal customers for decades to come,” said Jill Soltau, JCPenney CEO in a statement.
“We will remain one of the nation’s largest apparel and home retailers as we continue to operate a majority of our stores and our flagship store, jcp.com,” Soltau added. As COVID-19 restrictions are eased in various parts of the country, JCPenney has reopened approximately 500 locations since June 4.
Additionally, according to a Reuters report, private equity firm Sycamore Partners is in preliminary talks with JCPenney to invest in the company or purchase it outright. In another scenario being explored, Sycamore Partners would join with mall owners Brookfield Property Partners and Simon Property Group to bid for JCPenney, with the possible involvement of Wells Fargo, Reuters said.
As part of the debtor-in-possession (DIP) commitment with its existing first-lien lenders, JCPenney is exploring “additional opportunities to maximize value,” as well as restructuring, “including a third-party sale process,” according to the May 15 release on its bankruptcy filing. Such a deal would require a bankruptcy judge’s approval.
“Under a plan being discussed with its creditors, JCPenney would be split into two companies. One would be a real estate investment trust that would hold some of the company’s property and lease it back to JCPenney. The other would operate JCPenney’s retail business,” Reuters added.