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J.C. Penney Draws On Revolver To Fund Home Department Transitions

Monday April 15th, 2013 - 12:02PM


Today, J.C. Penney Co. announced plans to enhance its financial flexibility and position, in part to support the remerchandising of 500 home departments to a shop merchandising format.  In the process and consistent with previously stated plans, the company has drawn $850 million from a $1.85 billion committed revolving credit facility, a move that will fund working capital requirements and capital expenditures, it stated.

More specifically, J.C. Penney said it would use the money to replenish inventory levels in anticipation of completing work on its home department renovations next month.

Ken Hannah, J.C. Penney CFO, said, "Earlier this year, we increased our revolving credit facility in anticipation of operating, working capital and capital expenditure needs, especially during the first half of the year. As we near completion of the home department transformation in over 500 stores, we have been undertaking and will continue to experience a significant inventory build and increase in capital expenditures. The draw under our revolver today provides more than our current funding needs to ensure our continued liquidity. Moreover, we will continue to explore additional capital raising alternatives with the assistance of our financial advisors."

J.C. Penney noted that it has worked to improve performance through changes in its pricing and promotional strategies recently, including the return of coupons and the development of other new initiatives to drive store traffic and deliver the style, quality and value that its customers want.  The action today bolsters those efforts, as well as the company's on-going financial position, J.C. Penney insisted.