JCPenney Details 1st Wave of Store Closures, Reportedly in Talks for Acquisition
Private equity firm Sycamore Partners is in talks to acquire to JCPenney if the struggling retailer’s negotiations fail with its creditors, according to a Reuters report.
The New York-based Sycamore specializes in retail and consumer investments, and has investments in such companies as Staples, Belk and The Limited.
JCPenney, which has released the locations of its first wave of planned store closures after filing for Chapter 11 bankruptcy protection, is also talking with some of its landlords about possible deals, the report said, including Simon Property Group and Brookfield Asset Management.
JCPenney filed for bankruptcy protection last month, citing the need to eliminate the outstanding debt spurred by the widespread store closures from COVID-19. As part of this, it announced it would reduce its footprint by 30%, moving to just over 600 stores.
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Under the first wave, 154 stores in 38 states will close after a June 11 hearing in Corpus Christi, TX, a process expected to take 10 to 16 weeks to complete.
The retailer also shared that it anticipates the next phase of store closures to begin in the coming weeks.
“While closing stores is always an extremely difficult decision, our store optimization strategy is vital to ensuring we emerge from both Chapter 11 and the COVID-19 pandemic as a stronger retailer with greater financial flexibility to allow us to continue serving our loyal customers for decades to come,” said Jill Soltau, JCPenney CEO.
Soltau has led the company through a multi-year transformation since joining in 2018, intended to ramp up the customer experience and tamp down on inventory. But the challenges the apparel retailer confronted from nationwide store closures have proved to be more than it could maintain.
Under its Chapter 11 reorganization strategy, the firm intends to focus heavily on e-commerce and drive $2.3 billion in sales by fiscal year 2024.
Total U.S. retail sales (including auto and fuel) are expected to drop by 10.5% this year, to $4.894 trillion, according to eMarketer, aligning with spend totals from 2016. Total apparel and accessories sales are forecast to drop almost 22% this year, translating to a loss of more than $100 billion vs. 2019.
While e-commerce is expected to rise 18% this year, to $709.89 billion, it’s not enough to offset physical retailer’s declines, it noted, adding that total sales won’t rebound to 2019 levels until 2022.