J.C. Penney Co. Inc., which just got a new lease on life by agreeing to sell its retail operations to two big developers, had a poor, but hardly surprising second quarter.
The midtier department store chain suffered a net loss of $398 million in the quarter ended Aug. 1. It was steep decline from the $48 million lost in the year-ago quarter. Total revenues came to $1.46 billion in the last quarter, a big drop from the $2.62 billion in revenues generated in the year-ago period.
The reorganization has been costly, forcing the company to spend $108 million in reorganization fees for advisers, financing fees, employee retentions and other costs.
Other costs and expenses, including merchandise, selling, general and administrative expenses; real estate; depreciation; amortization; restructurings, and management transitions were down to $1.6 billion from $2.6 billion in the year-ago period.
On May 15 of this year, the retailer filed for Chapter 11 bankruptcy in U.S. Bankruptcy Court for the Southern District of Texas. The company had been struggling for years but the pandemic was a strong blow, forcing stores to close, and giving Penney’s no choice but to file for a voluntary bankruptcy reorganization.
But the company got a new lease on life this week when it signed an agreement to sell its retail operations to Brookfield Property, Simon Property Group and first lien lenders.
Penney’s signed a letter of intent, which is nonbinding, and does leave open the possibility of another offer coming in. However, Penney’s, is working to formalize the deal, which would enable the company to keep its stores operating and emerge from bankruptcy.
The deal envisions a $1.75 billion price tag and would include a $300 million equity check from Brookfield and Simon, as well as $500 million of financing from the retailer’s current debtor-in-possession and first lien lenders.