J.C. Penney Co. Inc. calmed a lot of jittery nerves Monday with a new $1.75 billion loan from Goldman Sachs, but the troubled retailer still has a ragged path going forward.
The five-year senior secured term loan facility was much larger than the $1 billion in funding many were expecting and will give Myron “Mike” Ullman 3rd, on his second tour as chief executive officer, more time to try to rebuild the company’s base.
Ullman is picking up the pieces after his successor, and predecessor, Ron Johnson, tried to transform the dowdy Penney’s into a trendier string of shops-in-shop selling goods at full price. The effort pushed the company to a loss of nearly $1 billion last year as sales fell 25 percent.
The loan from Goldman, which is backed by the company’s real estate and its other assets, with some carve outs, allows Penney’s to look toward the future.
“This loan facility is an important component of our strategic plan to strengthen the company’s financial position,” said chief financial officer Ken Hannah. “Together with our revolving credit facility, this will give us the financial strength we need to meet our current funding requirements and build toward a successful future.”
Under the terms of the commitment letter from Goldman, the money can go toward working capital requirements, general corporate purposes and to cover bonds coming due in 2023.
Deutsche Bank analyst Paul Trussell said the liquidity concerns around Penney’s are “off the table for now” and that focus is turning toward its operating fundamentals.
Just because Penney’s has secured more financing, it doesn’t mean vendors will get a break. Trussell expects the company to ask vendors for assistance with promotions and markdown costs. He also expects Penney’s to tweak its marketing, hold off on new shops and eventually close 10 percent of its 1,100 doors.
Now that the company has reassured the market of its immediate survival, it needs to pick a path for the future.
“Penney’s is Penney’s,” said Gary Wassner, president of factor Hilldun Corp. “It’s not going to be TJ Maxx, it’s not going to be Macy’s. They’re stuck in that lower middle area they have to find their customer. My confusion today is, ‘Who is the J.C. Penney customer?’ Until they determine that, I don’t know that there’ll be a tremendous amount of confidence in the market.
“It’s so unclear who they are,” Wassner said. “You can’t operate today if you don’t have a clear point of view, the Internet just strips you of any identity.”
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast