Many experts are disbelieving in JC Penney’s survival, even as it gets rid of its debt and reduces the number of stores. Many of the customers are likely to buy more at discount stores. On the Island, JC Penney has six stores and just over a thousand employees, most of who are temporarily laid off.
Coronavirus in the United States: the departmental store chain JC Penney files for bankruptcy.
Due to the quarantine of Covid-19 and online sales, it was unable to overcome the economic crisis. It has 800 stores in the USA.
JC Penney, most iconic chain departmental stores in the US, filed for bankruptcy on Friday 15 May, as it could not overcome the economic crisis by the pandemic of coronavirus.
Moreover, it has announced that it has more than $500 million in cash on hand and received commitments for another $ 900 million in financing to use during the bankruptcy process.
The departmental store chain had long struggled to stay afloat, amid the growing crisis of retail stores with a physical presence, facing the competition of online shopping.
In 2020, its approximately 800 locations are less than a quarter of what it had in 2001.
Coronavirus: JC Penney filed for bankruptcy and may lose some of its branches
JC Penney was already struggling with almost $4 billion in debt before the coronavirus.
The company even said that it is evaluating the possibility of selling the business, which would make it the fourth large retailer to fall apart amid the coronavirus crisis, for which many stores decided to close their doors.
The money would allow the company to maintain operations while going through bankruptcy proceedings in federal court in the city of Corpus Christi, located in the state of Texas.
The loan consists of new financing of US $450 million, which is added to the existing debt that the company faces.
The retailer added that they had $500 million in cash available before the bankruptcy was filed. Although JC Penney aims to reorganize its business and eliminate the debt it has today to avoid bankruptcy, it will also explore the alternative of making a sale of the business.
The company announced that it will follow a phased strategy and that it could start by closing some stores. Also, JC Penney anticipated that more details of its strategy will be known in the coming weeks.
JC Penney is a 118-year-old company that has operated in more than 1600 locations and employed nearly 200000 people. Still, its decline predates the outbreak of the coronavirus. Even before the Covid-19 outbreak, the company struggled with a debt of nearly $4 billion and pressure from brands with huge discounts and online sales.