This seems like a daily occurrence.
Another day, another retailer heading into bankruptcy.
JCPenny is the latest name to put itself in position to seek protection in the courts. The company raised money as a step to enter bankruptcy. It will also close near 100 stores.
This week we saw a couple other retailers enter the ranks.
The company amassed over $4 billion in debt over the last few years. This could eventually lead to the closing of 25% of its 850 stores.
In April, the company missed a debt payment which kicked off a 30 day grace period. Most were aware the chance of it making the payment was minimal. The grace period ends in a week.
JCPenny is just another in a line of department stores that struggled as online sales and a lack of foot traffic took its toll. This is a trend that was ongoing for a number of years. The response to the coronavirus meant that all stores were shut down starting in March.
In May, a few stores were reopened with precautions as plastic screens being installed.
How will they handle the situation going forward?
The executive team is in the middle of a turnaround plan. They are trying to sell off inventory and change the company's image.
Reports that the company received $500 million in funding from different institutions. The bankruptcy will be pre-packages since equity was involved in the deal.
There are many watch lists being assembled of companies that have awful bond ratings. Not surprisingly, JCPenny was on that list.
This is not the last bankruptcy we are going to see. The next few months they will start to pile up.