JC Penney, the retail giant that recently filed for bankruptcy, is giving more insights into how it will be going about its reorganization. According to reports, the firm will shutter 30 percent of its locations in the coming months, as it seeks to draw up a path to profitability.
The Plan for Renewal
The Texas-based firm filed for bankruptcy protection earlier this month, as a vast majority of its locations had been rendered all but obsolete as a result of the coronavirus pandemic.
The filing came after several years of profits and sales declining, as well as what several news sources have described as strategic missteps.
When the Texas firm announced bankruptcy, everyone understood that it would impact jobs and mean location closures. Now, the firm is beginning to give details on how the process will run.
In a filing with the United States Securities and Exchange Commission, JC Penney unveiled its “Plan for Renewal.” Company officials have confirmed that the firm has about $500 million in cash and lender commitments. They plan to use this money to begin the restructuring process.
Under the said process, JC Penney will close 30 percent of its 846 stores. Going further, the firm explained that it hopes to close as much as 192 of those stores by February 2021, as well as another 50 by 2022. The process will leave JC Penney with a little over 600 locations.
COVID-19 Strips Retail Companies Bare
The bankruptcy filing is signaling what could very well be the end of physical retail. At the very least, it is culling some of the weak companies already.
Last month, CNN Business outlined several notable retail companies that were teetering on the brink of bankruptcy. At the time, the news source pointed out J Crew, JC Penney, Sears, and Neiman Marcus. Bloomberg also reported last month that Neiman Marcus was considering filing for bankruptcy as the firm was facing a $4.3 billion debt profile.
Sears already filed for bankruptcy protection in 2018. In the time the CNN Business report came out, all three firms had filed for bankruptcy.
J Crew announced its filing this month, too, as it registered with the federal bankruptcy court in the Eastern District of Virginia. The firm also announced that it would enter a debt-for-equity swap with its lenders to the tune of $1.65 billion. Two weeks ago, Neiman Marcus filed for bankruptcy too.
However, it’s worth noting that this might not be the end of JC Penney. Earlier this week, Forbes reported that the company was in talks with Amazon over a possible acquisition.
A reporter for the news source confirmed that a team from the Seattle-based e-commerce firm was already in Plano, Texas, to meet with JC Penney’s executives. More specifically, Amazon is reportedly looking to expand its presence in the apparel space with the JC Penney acquisition.