J.C. Penney Losses Deepen
J.C. Penney Co. Inc., impacted by COVID-19, bankruptcy reorganization costs and lingering difficulties from past failed recovery strategies, suffered a net loss of $112 million for the monthlong period ended Sept. 5.
In last year’s comparable monthly period, Penney’s lost $73 million. Total revenues in the most recent month were $694 million, compared to $1.01 billion in the year-ago period.
Reorganization costs were $38 million in the month ended Sept. 5.
However, Penney’s has been able to lower total costs and expenses while in bankruptcy. They came to $738 million in the month ended Sept. 5, versus $1.06 billion in the year-ago period.
Penney’s which has been struggling for decades, was making some progress in its turnaround plan led by chief executive officer Jill Soltau until the outbreak of the coronavirus, which forced the middle-market department store chain into bankruptcy last May.
Attempting to exit bankruptcy, Penney’s reached a tentative agreement to sell its retail operations to two landlords, Simon Property Group and Brookfield Property, and first lien lenders. Penney’s signed a letter of intent, which is nonbinding, and does leave open the possibility of another offer coming in.
There are some concerns that Penney’s has yet to formalize the deal, which would enable the company to keep its stores operating and emerge from bankruptcy. The company has sought an extension on finalizing the plan and having creditors vote on it. The longer a company is in bankruptcy, the harder it is to come out of it.
The deal envisions a $1.75 billion price tag and would include a $300 million equity check from Brookfield and Simon, as well as $500 million of financing from the retailer’s current debtor-in-possession and first lien lenders.
For the seven months ended Sept. 5, Penney’s has lost $1.06 billion, and generated $3.35 billion in revenue. Reorganization costs totaled $146 million.
The Plano, Tex.-based retailer is required to issue monthly financial reports to its lenders. However, the company cautions that the August monthly information does not include certain quarterly adjustments and other important explanatory notes.
Sign up for WWD's Newsletter. For the latest news, follow us on Twitter, Facebook, and Instagram.
