Following a comprehensive evaluation of its retail footprint and a careful analysis of store performance and future strategic fit for the company, J.C. Penney identified the first phase of 154 store closures.
Store closing sales will begin at the 154 locations. The company said it expects additional phases of store closing sales will begin in the coming weeks. As the company remains focused on its Plan for Renewal and driving sustainable, profitable growth, it intends to reduce its store footprint and focus resources on its strongest stores and e-commerce flagship store. Store closing sales for the first round of store closures are expected to take 10-16 weeks to complete.
“While closing stores is always an extremely difficult decision, our store optimization strategy is vital to ensuring we emerge from both Chapter 11 and the COVID-19 pandemic as a stronger retailer with greater financial flexibility to allow us to continue serving our loyal customers for decades to come,” said Jill Soltau, CEO of J.C. Penney.
Soltau continued, “As of June 4, 2020, we have reopened nearly 500 stores since government officials have eased COVID-19 restrictions and we look forward to opening more. We are excited to welcome back our customers and associates at these locations, and we will continue to take actions to be best positioned to build on our over 100-year history.”
As previously announced, J.C. Penney entered into a restructuring support agreement with lenders. To implement the financial restructuring plan, the company filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code.
The company also said it has received court authorization to access its debtor-in-possession financing, which includes $450 million of new money from its existing first lien lenders. The company had previously received approval to access and use its approximately $500 million in cash collateral. Under the terms of the DIP agreement, JCPenney has access to up to $225 million immediately, and will have access to an additional $225 million as needed after July 15, 2020, subject to certain conditions. In addition, the company’s Ad Hoc Crossholder Group of lenders has agreed to participate in the rollup portion of the DIP in the amount of $53 million.
Soltau added, “This is a positive step forward that will help us execute our Plan for Renewal and store optimization strategy, continue working seamlessly with our vendor partners, fund our ongoing business operations, and continue our focus on further developing the company’s go-forward business plan to successfully restructure J.C. Penney.”