The 118-year-old department store chain JC Penny has been pushed into Chapter 11 bankruptcy due to falling sales amid the coronavirus pandemic, the fourth major US retailer to meet that fate.
The iconic business said it is filing for Chapter 11, a mechanism which allows a company that can no longer pay its debts to restructure. The Texas-based group will close some stores across the United States as a result.
Penney joins luxury department store chain Neiman Marcus, J Crew and Stage Stores in filing for bankruptcy reorganisation.
“The coronavirus (Covid-19) pandemic has created unprecedented challenges for our families, our loved ones, our communities and our country,” said Chief Executive Officer Jill Soltau in a statement on company’s website.
“The American retail industry has experienced a profoundly different new reality, requiring JC Penney to make difficult decisions in running our business,” she said.
“Until this pandemic struck, we had made significant progress in rebuilding our company. While we had been working in parallel on options to strengthen our balance sheet and extend our financial runway, the closure of our stores due to the pandemic necessitated a more fulsome review to include the elimination of outstanding debt,” said Soltau.
Penny, which has not turned a profit since 2011, operates 850 stores with nearly 90,000 workers. It has 500 million dollars in cash and received financing commitments of 900 million dollars from lenders.
The company missed a debt interest payment in April, fueling speculation of impending bankruptcy.
Founded in 1902 in Wyoming by James Cash Penney, the chain survived the Great Depression and established itself in the second half of the 20th century as an anchor of giant suburban shopping malls, then symbols of American consumerism.
Its decline began a decade ago with the advent of online shopping and the rise of Amazon as well as trendy, cheap chains like H&M and Zara.
Last year, it reported sales of 10.7 billion dollars, marking a decrease of 7 billion dollars in 10 years. Now the pandemic has put department stores further in peril as they see sales evaporate with extended closures.