JC Penney appears headed for a bankruptcy filing within the next few weeks. The retailer is in discussions with existing lenders for a so-called debtor-in-possession loan that would keep the department-store chain’s operations funded during a court-supervised bankruptcy, WSJ first reported.
- Crises exacerbate existing problems: The 118-year-old company has been losing money for years. With its mall-based stores closed and unlikely to reopen any time soon, the company has been forced to put aside its latest turnaround strategy and face its creditors at the negotiating table.
Department store-wide trend:
- Sears filed for bankruptcy in 2018 and has continued to close stores and sell assets since leaving court protection.
- Macy’s plans to close 125 locations over the next three years.
- Neiman Marcus Group is planning to file for bankruptcy any day.
- Gap warned it had burned through half its cash savings, even after drawing down its entire credit line and skipping April rent payments, and would need to raise additional money to fund its operations this year.
Be Smart: Analysts at UBS said in a research note that if online shopping increases to 25% of retail sales up from its current 15%, a whopping 100,000 stores could close by 2025, according to USAToday. Department store chains account for about 30 percent of the total mall square footage in the United States, with 10 percent of that coming from Sears and J.C. Penney.