J.C. Penney on Wednesday announced, as the department store chain looks to recover from Chapter 11 protection and the global health crisis, that it will slash about 1,000 jobs and close down 152 shops.
The job cuts would impact corporate, field personnel, and international positions and qualified departing staff would be granted a separation compensation. J.C. Penney is also in discussions with building owners with regards the store closures.
The embattled retail giant sought court protection on May 15, with around 860 branches and roughly 90,000 full-time and part-time workers. The group has announced plans to shutter around 170 shops in recent weeks, although negotiations with landlords are ongoing.
According to J.C. Penney chief executive officer Jill Soltau, these decisions are always "extremely hard, and I would like to thank these associates for their hard work and dedication," Lauren Hirsch and Lauren Thomas of CNBC quoted Soltau as saying, in their report.
On Tuesday, J.C. Penney confirmed in a court filing that it had arranged an agreement with its lenders to extend a deadline initially set on it as part of a bankruptcy financing.
Based on the conditions of its debtor-in-possession financing deal, it had to provide a confidential business plan to its lenders by July 8 and get two-thirds of them by Wednesday. If it missed the deadline, it would have had to start the process of selling off its assets.
After submitting its business plan on time, J.C. Penney will have until July 31 to evaluate the plan with its creditors and review potential buyers for the company. That gives it around two more weeks to come up with a deal to help it steer clear of a liquidation.
Though the ongoing global crisis has further affected J.C. Penney's revenues, the store had been on a downward trend for years in the midst of growth in e-commerce and is overburdened by $4 billion in unpaid obligations.
In its most recent quarter, J.C. Penney's revenues plunged almost 9 percent to $3.4 billion, compared to the previous year, while profits dropped around two-thirds from a year ago to $27 million. The retail giant defaulted on two debt payments in April and May, which market observers saw as a prelude to financial collapse.
Before the pandemic, the retail group was already hounded with declining revenues in the face of stiff digital competition, ballooning debt, and declining customer volume to shopping malls. The coronavirus forced the company to temporarily suspend all of its stores, damaging sales and setting the stage to file for bankruptcy.
