J.C. Penney filed for bankruptcy protection on Friday with plans to permanently close some stores and also explore a possible sale. The department store chain, known for selling family apparel, cosmetics and jewelry at 850 locations, said it reached an agreement with existing lenders for $900 million of debtor-in-possession financing to aid operations while it navigates bankruptcy proceedings. While J.C. Penney plans to reorganize and emerge from bankruptcy proceedings after eliminating several billion dollars of debt, it will also explore a sale as part of the terms of its new financing. The company also said it would begin closing some stores permanently in phases and would disclose further details in coming weeks.
Total Retail's Take: It's no surprise that the iconic retailer has filed for bankruptcy. Last week, we reported that J.C. Penney was days away from filing bankruptcy and scrambling to get enough financing to allow it to continue to operate under chapter 11 proceedings. It has laid off or furloughed more than 80,000 of its employees and missed payments on two debt payment deadlines. The company earlier this month also resolved a legal dispute with Sephora, the beauty chain owned by LVMH that had threatened to end its agreement to sell cosmetics inside J.C. Penney stores. J.C. Penney is the latest brick-and-mortar retailer to crumble in response to the COVID-19 pandemic, which has been driving stakes through long-troubled retail businesses. Even before the coronavirus outbreak, J.C. Penney was struggling with nearly $4 billion of debt and pressure from both discount retailers and e-commerce companies. The bottom line: It's sad to see J.C. Penney in its current state. Friday's bankruptcy filing caps a long decline for the 118-year-old department store chain, which originally had stores on Main Streets in rural towns dominated by farmers, and at one point operated more than 1,600 locations that became fixtures in U.S. malls.