Losses at J.C. Penney Co. Inc. are piling up.
Hurt by COVID-19 and immersed in bankruptcy proceedings since May 15, J.C. Penney suffered a $546 million loss in the first quarter ended May 2. In the year-ago quarter, Penney’s lost $154 million.
The Plano, Tex.- based, middle American department store chain saw its revenues drop to $1.2 billion in the first quarter of this year, from $2.56 billion in the year-ago quarter.
Penney’s operating loss in the first quarter was $477 million, compared to an operating loss of $93 million in the year-ago period.
Currently, the 850-unit Penney’s is in the process of liquidating 136 stores, though the retailer has 167 stores on its current list of units to be closed and is expected to announce additional closings.
“We do anticipate a third round of store closures, but the date has not been decided yet,” a Penney’s spokeswoman recently told WWD. There’s no word yet on how many stores will be closed in the next round, though some retail experts believe Penney’s needs to shutter at least several hundred stores in order to survive.
On June 4, Penney’s disclosed the first phase of 154 store closures, and noted that additional phases would occur. The company said it would focus on its strongest stores and e-commerce.
Though Penney’s hasn’t revealed the timing of a third wave of closings, it’s expected that the company will make the call soon. Bankruptcy enables retailers to get out of weak locations without penalty.
Penney’s did get a break on its rent obligations recently, with the bankruptcy court extending the deadline to pay rent to July 13, right before a mid-July deadline for it to finalize a concrete business plan, or wind up switching to some sort of sale. There has been speculation that the Simon Property Group, Brookfield Properties, Sycamore and Amazon are among those that have taken interest in acquiring Penney’s, to one degree or another.
Penney’s business has been on a decline for decades, and the slide was exacerbated by the ill-conceived reinvention strategy by Ron Johnson, who ran the chain from 2011 to 2012 and was fired after 16 months on the job. Subsequent managements were able to stop the bleeding, but Penney’s has never fully recovered. It is believed that Penney’s was on a path to bankruptcy even before the coronavirus outbreak and that the pandemic only made it happen sooner.