NEW YORK (NYTIMES) - JC Penney, with its budget-friendly clothing for families and reliable home furnishings, was for years a cornerstone of US malls and an undeniable success story. What started as a humble dry-goods store in Wyoming in 1902 was a century later a national chain with a household name and more than 1,000 locations.
But on Friday (May 15), the company filed for bankruptcy protection after a prolonged decline over the past 20 years, becoming the latest and largest retailer to fall during the coronavirus pandemic, which has devastated the industry. The chain has more than 800 stores and nearly 85,000 employees.
Its collapse follows other retail bankruptcies this month, including J. Crew, the Neiman Marcus Group and the designer men's clothing brand John Varvatos. But JC Penney represents the biggest casualty by far based on the number of locations, with stores that are anchors at many of the nation's malls.
JC Penney said it filed for Chapter 11 protection from its creditors in federal bankruptcy court for the Southern District of Texas, adding that it had US$500 million (S$715 million) in cash on hand and had received commitments for US$900 million financing to use during the bankruptcy process.
The company said it had struck a deal with lenders that would reduce several billion dollars of its debt and it would explore a sale. It also said it planned to close stores.
Jill Soltau, JC Penney's chief executive, said that the retailer expected to emerge from "Chapter 11 and this pandemic as a stronger retailer."
The filing was expected after JC Penney failed to make an interest payment on its debt in April to "maximise financial flexibility" and then skipped another payment last week.
When JC Penney closes stores, it could have major implications for the mall landscape in the United States, which was already struggling. It could leave vast and unappealing empty spaces at many malls. And it could also allow smaller retailers to leave, based on agreements that are often contingent on the presence of anchors like JC Penney.
The company's sales have steadily shrunk in recent years to US$10.7 billion for the year that ended Feb. 1, when it posted a net loss of US$268 million from continuing operations.