Bankruptcy or Survival? J.C Penney is at a Tipping Point Due to the Coronavirus
The past couple of years have been rough on traditional retailers. Unfortunately, the black swan event that is the coronavirus pandemic worsened the challenges they’ve been facing even more.
J.C. Penney is among the many retail companies struggling to cope with the current state of the economy due to COVID-19.
Filing for Bankruptcy
The American department store chain has reportedly filed for a Chapter 11 bankruptcy amidst it tries to deal with the economic pressures that came with the pandemic. J.C.Penney, which once operated 846 locations across the United States, is seeking protection from its creditors while the company finds ways to solve the $7 billion worth of debts it has acquired.
The filing is also seen as a means for J.C. Penney to have some more financial flexibility, which can help it navigate through the current crisis.
Speaking in a statement, J.C. Penney CEO Jill Soltau shared that the current state of events in the world has led to the company making difficult decisions to protect its associates and the overall future of the retailer.
Caught in Bad Circumstances
Still, Soltau insisted that the company has been making strides to regaining its financial strength before the coronavirus came. It was the forced closure of its stores, although temporary, that led J.C. Penney to finally do an extensive review, which included addressing the billions in debt the company has.
The CEO also expressed the belief that a court-supervised restructuring plan is the best thing to do to make sure that the retailer survives to continue its 100-year history for the coming years.
J.C. Penney’s troubles can be traced back to the early 2010s when it tried to revitalize its image after experiencing years of declining sales numbers.
Coming back to today, the retailer said that closing stores is part of its plans to bounce back. However, it has yet to specify how many stores and when these are shutting its doors.
Its employees are already feeling the effects of the company’s struggle, though. A good part of J.C. Penney’s hourly retails associates have been furloughed since April.
In the end, Soltau is optimistic that the retailer would survive the pandemic and is looking forward to opening its stores once again.
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