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J. C. Penney Crashes on Hearsay of Bankruptcy Amid Coronavirus
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Shares of J. C. Penney Company, Inc. crashed 27.3% yesterday, as there were rounds that it is not making its scheduled interest payment of around $12 million and exploring alternatives, which may include bankruptcy. We note that the company, which was already struggling with soft sales, has been hit hard by the coronavirus-led store closures.
Although J.C. Penney has sufficient cash to survive the debacle, the company is considering bankruptcy as a way to sort out its finances and debt payments, per various media reports. According to sources, the company is not making the due interest payment on its senior notes and instead, summoning a 30-day grace time. During the grace period, the departmental store retailer will be assessing strategic options, such as bankruptcy and negotiations with creditors.
Apparently, the company has been in talks with banks for its liquidity requirements and also been looking to strike a debt deal with lenders. In fact, it has been negotiating with lenders since mid-2019, in an attempt to strengthen its balance sheet. The process has become all the more important now, considering the probable impact of the pandemic on the company’s business.
Well, the departmental store chain has long been grappling with dwindling sales due to tough competition from online retailers and discount chains. Also, failure to bring in fashionable and trendy brands has been a deterrent. Though J.C. Penney was making efforts to bring a turnaround through better inventory management and focus on high-margin businesses, the outbreak of coronavirus has again ruined its plans.
The deadly virus has not spared any sector, especially the retail space, wherein companies like Nordstrom (JWN - Free Report) , Kohl’s (KSS - Free Report) and Guess? (GES - Free Report) have shut stores for extended durations. Even J. C. Penney, which had shut its stores on Mar 18, expects to reopen stores only when it is safe. Although the company is still operating online, it is not likely to compensate for the lost store sales. Due to the store closures, the company also decided to temporarily furlough most of its hourly store associates. Further, J.C. Penney has taken various moves to enhance its financial flexibility, which include curtailing expenditure, keeping recruitment on hold, delaying capital expenditure and utilizing funds under the revolving credit facility, among others.
Clearly, J. C. Penney is meeting all ends to lift its financial position. Sources reveal that the company, which had to furlough workers and cut expenses in the wake of coronavirus, is also missing interest payments and considering bankruptcy to solve its debt problems.
Shares of this Zacks Rank #3 (Hold) company have plummeted 79.2% year to date compared with the industry’s decline of 62.8%.
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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J. C. Penney Crashes on Hearsay of Bankruptcy Amid Coronavirus
Shares of J. C. Penney Company, Inc. crashed 27.3% yesterday, as there were rounds that it is not making its scheduled interest payment of around $12 million and exploring alternatives, which may include bankruptcy. We note that the company, which was already struggling with soft sales, has been hit hard by the coronavirus-led store closures.
Although J.C. Penney has sufficient cash to survive the debacle, the company is considering bankruptcy as a way to sort out its finances and debt payments, per various media reports. According to sources, the company is not making the due interest payment on its senior notes and instead, summoning a 30-day grace time. During the grace period, the departmental store retailer will be assessing strategic options, such as bankruptcy and negotiations with creditors.
Apparently, the company has been in talks with banks for its liquidity requirements and also been looking to strike a debt deal with lenders. In fact, it has been negotiating with lenders since mid-2019, in an attempt to strengthen its balance sheet. The process has become all the more important now, considering the probable impact of the pandemic on the company’s business.
Well, the departmental store chain has long been grappling with dwindling sales due to tough competition from online retailers and discount chains. Also, failure to bring in fashionable and trendy brands has been a deterrent. Though J.C. Penney was making efforts to bring a turnaround through better inventory management and focus on high-margin businesses, the outbreak of coronavirus has again ruined its plans.
The deadly virus has not spared any sector, especially the retail space, wherein companies like Nordstrom (JWN - Free Report) , Kohl’s (KSS - Free Report) and Guess? (GES - Free Report) have shut stores for extended durations. Even J. C. Penney, which had shut its stores on Mar 18, expects to reopen stores only when it is safe. Although the company is still operating online, it is not likely to compensate for the lost store sales. Due to the store closures, the company also decided to temporarily furlough most of its hourly store associates. Further, J.C. Penney has taken various moves to enhance its financial flexibility, which include curtailing expenditure, keeping recruitment on hold, delaying capital expenditure and utilizing funds under the revolving credit facility, among others.
Clearly, J. C. Penney is meeting all ends to lift its financial position. Sources reveal that the company, which had to furlough workers and cut expenses in the wake of coronavirus, is also missing interest payments and considering bankruptcy to solve its debt problems.
Shares of this Zacks Rank #3 (Hold) company have plummeted 79.2% year to date compared with the industry’s decline of 62.8%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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