J.C. Penney Takes Sephora to Court Over Reopening Stores
J.C. Penney has filed a temporary restraining order against Sephora, asking a judge to stop the makeup seller from leaving the retailer’s stores, reports CNBC. The ailing department store chain is trying to avoid a major blow to its recovery prospects from the coronavirus pandemic while in the process of reopening stores. According to Dallas Morning News, Sephora tried to keep J.C. Penney from reopening Sephora inside JCPenney (SiJCP) locations and has countersued, moving the case to federal court.
Sephora doesn’t want to reopen its more than 600 shops inside J.C. Penney stores unless the department store agrees to shorten the contract term, which has about four years left on it. Sephora and J.C. Penney have had a joint enterprise operating agreement since Feb. 1, 2009, according to the April 27 court filing. Sephora was found to have “threatened imminent termination” of the contract, which would cause J.C. Penney to suffer “irreparable injury,” including a loss of business opportunities, the filing said.
Total Retail's Take: For J.C. Penney and several other high-profile, but struggling, retailers, its woes have been worsened by the coronavirus pandemic. J.C. Penney was already burdened with a heavy debt load and is reportedly considering Chapter 11 bankruptcy protection. If Sephora backs out of J.C. Penney stores now, it would be a huge blow to the department store chain just as it's hoping to reopen select locations and restructure its debt. J.C. Penney would lose customers who shop at SiJCP — a large portion of in-store revenue — which may doom the retailer and its nationwide store network. Sephora said in a statement, “Although this is a sudden and unfortunate development, we're hopeful of continuing discussions and reaching an amicable agreement for both Sephora and J.C. Penney.” It will be interesting to see if Sephora ultimately breaks its contract with J.C. Penney and, if so, will the department chain be able to withstand that blow to its business.
Kristina Stidham is the digital content manager at Total Retail and sister brand Women in Retail Leadership Circle. She is passionate about digital media and handles social media, video, and podcast production for both brands, as well as contributing articles and attending events. Kristina holds a B.A. in Media Studies and Production from the Temple University Klein College of Media and Communication in Philadelphia.