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Retailer J.C. Penney filed for Chapter 11 bankruptcy protection after the coronavirus pandemic forced stores to shut, the company announced Friday evening, joining J. Crew and Neiman Marcus.
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The stock has lost over 83 percent of its value in the last 12 months as business deteriorated even before the pandemic hit.
Penney’s had been making efforts to revive the business but the coronavirus “created unprecedented challenges,” CEO Jill Soltau said in a statement.
The Plano, Texas-based chain’s parent, J. C. Penney Company, said it had entered into a restructuring support agreement with the lenders that hold about 70 percent of its first lean debt. The deal includes terms for financial restructuring designed to cut several billion in debt.
An unspecified number of its stores will close in phases as it looks to shrink its footprint going ahead.
J.C. PENNEY STAVES OFF BANKRUPTCY
Earlier Friday, Penney made a $17 million payment to its lenders. The company had about $500 million in cash as of the bankruptcy filing and it has received commitments for $900 million in debtor-in-possession financing, including $450 million in new money, though the financing still requires court approval.
The restructuring agreement is also designed to help Penney navigate through the ongoing coronavirus pandemic, the company said. Penney will continue fulfilling online orders and offering contactless curbside pickup service at its open stores.
“As a result, the American retail industry has experienced a profoundly different new reality, requiring JCPenney to make difficult decisions in running our business to protect the safety of our associates and customers and the future of our company,” Soltau said.
Many retailers have struggled as the coronavirus forced non-essential workers to stay home while others have thrived including Amazon and Walmart.
SEPHORA WANTS TO BACK OUT OF JCPENNEY STORES
As the retailer works to restructure, it will also continue its efforts to improve margins, reduce inventory, eliminate inefficient spending and invigorate the shopping experience it provides. Before the pandemic hit, the strategy showed some progress with improvement in six of eight merchandise divisions in the second half of 2019.
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“We have a newly refreshed, highly experienced team of retail executives who remain focused on rebuilding our business and restoring financial strength to JCPenney,” Soltau said. “This team has continued to innovate even during these challenging times, implementing substantial improvements to our flagship eCommerce platform to increase efficiency and ensure our loyal customers continue to have access to the products they need through elevated shopping experiences.”
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