Retailers already were having a tough time of things back in 2019 as eCommerce continued to dominate over traditional brick-and-mortar shopping outlets. However, this divide has been further exacerbated for many retailers across the country. Now that online shopping has dramatically exploded due to this coronavirus pandemic, many retail brands are on the cusp of going bankrupt. That appears to be what’s happening with J.C. Penny (NYSE:JCP), which is apparently in advanced bankruptcy talks with a group of financiers.
The Wall Street Journal went on to report that the retailer, which has around 800 stores across the country, is in talks with a variety of banks to secure a debtor-in-possession loan that would let the company’s stores continue to operate while it undergoes a court-supervised bankruptcy. This bankruptcy loan could be as large as $1 billion according to some sources familiar with the subject. While when exactly this will take place is yet to be decided, it’s expected that this bankruptcy filing could happen as soon as May. J.C. Penney missed an interest payment to its bondholders back on April 15th and is now entering a 30-day grace period.
It’s a disappointing end to a company with a 118-year history. Unfortunately, it is a story that’s becoming far too common among non-niche retailers. Another well-known brand, Sears, also went bankrupt years ago, marking one of the largest retail collapses at the time. However, in J.C. Penney’s case, the coronavirus pandemic and its effect on retail sales were what sealed the deal for the company. Especially since it appears that stores like malls are going to remain closed for quite some time, it’s hard to see how the retailer would have made a comeback otherwise.
The only retailers that are thriving in this economy are those that have significant online presences. Most notable of which includes Amazon, whose shares have surged with the company hiring tens of thousands of new employees to keep up with demand. Walmart, as one of the few outlets still open at this time, has been doing good as well, with the retail giant also hiring thousands of more jobs across the country. Walmart also has a significant online presence, although still far from that of Amazon’s.
At the moment, there have been over 2.7 million confirmed coronavirus cases around the world, the with total number likely being many times higher than this. Around 870,000 of them are from the U.S., while European countries like Spain, Italy, France, and Germany are following distantly behind. It wouldn’t be surprising if a number of other well-known retailers go bankrupt as well in the months to come.
J.C. Penney Company Profile
JC Penney Co Inc is an American omnichannel retailer. It sells merchandise and services to consumers through department stores and its own website. The product portfolio mainly comprises apparel and footwear, accessories, fine and fashion jewelry, home furnishings, and beauty products (the latter through Sephora inside JC Penney). JC Penney offers private, exclusive, and national brands across the United States and Puerto Rico. – Warrior Trading News
