Bankrupt US retail giant JCPenney is to shutter 154 stores as it proceeds with plans to emerge as a smaller department store chain, with additional closures expected in the coming weeks.
The company, which filed for Chapter 11 Bankruptcy protection last month, intends to reduce its store footprint and focus resources on its strongest stores and e-commerce business as part of its ‘Plan for Renewal’ and bid to drive profitable growth.
Store closing sales for the first round of closures are expected to begin next week and to take between ten and 16 weeks to complete.
“While closing stores is always an extremely difficult decision, our store optimisation strategy is vital to ensuring we emerge from both Chapter 11 and the Covid-19 pandemic as a stronger retailer with greater financial flexibility,” says CEO Jill Soltau.
As of yesterday (4 June), JCPenney, which is one of the US’s largest apparel and home retailers, had reopened about 500 stores since government officials eased Covid-19 restrictions.
The first phase of store closures comes as the company received authorisation from the US Bankruptcy Court for the Southern District of Texas to access its debtor-in-possession (DIP) financing, which includes US$450m of new money from its existing first lien lenders.
“This is a positive step forward that will help us execute our Plan for Renewal and store optimisation 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 JCPenney,” Soltau says.
The US retailer is one of a number to have fallen casualty to the coronavirus crisis, including Stage Stores, Neiman Marcus and J.Crew.