Legacy retailer JCPenney recently filed for bankruptcy and has now announced a plan to close about a third of its stores. COVID-19 has driven a surge in retail bankruptcies, although in most cases the impacted stores were not doing well even before the pandemic. Also keep in mind that these filings are for re-organization of debt with creditors and the merchants intend to re-open with a slimmed-down company. Nonetheless, the pattern of store closings among large merchants such as J.Crew and Neiman Marcus remains troublesome. Malls will suffer as store anchors disappear. This will have a domino effect on many smaller mall tenants who will also close if foot traffic declines substantially.
The following Reuters article reports more on this topic which is excerpted below:
J.C. Penney Co Inc plans to trim its store count by 29% to about 604, as the U.S. department store chain looks to focus on those more profitable, a regulatory filing showed on Monday, two days after it filed for bankruptcy protection.
The stores to stay open accounted for 82% of the company’s fiscal 2019 sales, J.C. Penney said. Reuters on Friday reported that the company was planning to shutter roughly 200 stores.
J.C. Penney, which is looking to cut costs to remain afloat, plans to reorganize and emerge from bankruptcy proceedings after eliminating several billion dollars of debt. It will also explore a sale as part of the terms of its $900 million of debtor-in-possession financing.
Overview provided by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group.