The company was already experiencing a downward trend but suffered the final blow as the pandemic hit
American retail giant, JCPenney, filed for bankruptcy on Friday. The end was fast approaching for the departmental store chain which was accelerated with the outbreak of the pandemic. According to CNN, the company has for the longest time been struggling with decades of bad decisions, executive instability, and damaging market trends. The 118-year-old company was finally knocked out after the coronavirus forced a lot of economic restrictions. The store sold clothing, cosmetics, and jewelry at over 850 locations in the US as well as Puerto Rico. It has become the third giant corporation to file for bankruptcy following J.Crew and Neiman Marcus.
JCPenney files for bankruptcy. The Covid-19 crisis is the final blow to a 118-year-old company struggling to overcome a decade of bad decisions, executive instability and damaging market trends. https://t.co/1vqeTIAwIi— CNN Breaking News (@cnnbrk) May 15, 2020
JCPenney was originally founded more than a century ago in Plano, Texas. It was one of the country’s first department stores. And like many other department stores, it has been fighting a losing battle with online retailers as more people are turning to virtual shopping. The JCPenney stock lost over 83 percent of its value in the last 12 months as business deteriorated, way before the pandemic hit, reports Fox Business. The departmental chain's parent company had entered into a restructuring support agreement with the lenders that hold about 70 percent of its first lean debt. This agreement also includes terms for financial restructuring which would help cut several billion in debt.
JC Penney now bankrupt. 85,000 employees now unsure about the future. Won’t be the last major bankruptcy. https://t.co/DIng0oerwH— Andrew Yang🧢🇺🇸 (@AndrewYang) May 16, 2020
NBC News reports that the pocket-friendly departmental store had entered the pandemic with a downward trend in sales and a $3.7 billion debt load. The sales have been falling since 2004 as the management went through four chief executive officers since 2004. "The Coronavirus (COVID-19) pandemic has created unprecedented challenges for our families, our loved ones, our communities, and our country," CEO Jill Soltau said 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."
Pour one out for JC Penney, which filed for bankruptcy today after struggling for years. I’m feeling the feels — after wearing those coordinates priced “UNDER $10” pic.twitter.com/BmKZcRWrHr— Elise Hu (@elisewho) May 16, 2020
The stocks for the company are currently valued at only 24 cents. Its revenue has also plunged since 2007. But in the 1990s, JCPenney dominated the retail market offering its customers and shoppers looking for more affordable styles. It was even a step ahead in the internet takeover by becoming one of the first companies to start selling online. But the company was ultimately unable to keep up with a rise in the competition of online shopping. Now, the company is rolling out the closure of its departmental stores. An unspecified number of its stores will close in phases as it looks to shrink its footprint going ahead.
"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," said Soltau. "Implementing this financial restructuring plan through a court-supervised process is the best path to ensure that JCPenney will build on its over 100-year history to serve our customers for decades to come." JCPenney is said to have received $900 million in financing from its existing first-lien lenders to fund the bankruptcy. This includes $450 million of new money. It had about $500 million in cash when it filed for Chapter 11 bankruptcy with the US Bankruptcy Court for the Southern District of Texas, in Corpus Christi. Penney has also made a $17 million payment to its lenders.
A look back in time shows just how much department stores’ dominance has waned. In 1992, department stores accounted for 14.3% of overall retail sales, excluding gas and car dealer sales, per the Commerce Department. That share was a paltry 3.7% last yr.https://t.co/KReYY6lhRD— Lauren Thomas (@laurenthomas) May 16, 2020
"We have a newly refreshed, highly experienced team of retail executives who remain focused on rebuilding our business and restoring financial strength to JCPenney,” Soltau said.
This team has continued to innovate even during these challenging times, implementing substantial improvements to our flagship eCommerce platform to increase efficiency and ensure our loyal customers continue to have access to the products they need through elevated shopping experiences."