Coronavirus Causes JC Penney to File for Bankruptcy

Department store retail chain JC Penney has long been struggling and was hoping for a turnaround until COVID-19 happened.

The company has now filed for bankruptcy as coronavirus has caused the chain to be weighed down by debt. Sales have been falling annually for JC Penney since 2016. The company lost money in eight of the last nine years, totaling $4.45 billion, according to FactSet.

J.C Penney couldn’t pay a $12 million interest payment on April 15, starting the clock on a 30-day grace period. On Friday, it said it made a $17 million interest payment that was due May 7.

Last month the Wall Street Journal had reported the company was in advanced talks for bankruptcy funding, and was seeking a loan package of $800 million to $1 billion to keep its operations afloat during a potential bankruptcy process.

“If you go back to the ‘80s, J.C. Penney at that point in time was a family retailer that sold a lot of interesting products from fashion to homewares (and) was a destination for a lot of consumers to go and do their shopping,” said Neil Saunders, managing director of GlobalData Retail.

It was revealed this past weekend in an SEC filing that the company’s top four executives were paid millions of dollars as a “please stay” bonus.

The Texas-based retailer has about 90,000 full-time and part time employees as of February.
Shares have fallen over 80% YTD.

Disclaimer: We have no position in J C Penney Company Inc. (NYSE: JCP) and have not been compensated for this article.