J.C. Penney To Cut 1,000 Jobs, Close 152 Stores; Stock Surges 16%
Shares in J.C. Penney Co. Inc (JCPNQ) jumped 16% after the debt-strapped U.S. department store chain announced a restructuring plan to close 152 stores and cut 1,000 jobs.
The stock surged to $0.31 in afternoon trading after the retailer said that the organizational restructuring will create a “smaller, more financially flexible company, and will help ensure it emerges from both Chapter 11 and the coronavirus pandemic”. J.C. Penney, which has about 850 stores across the U.S. and Puerto Rico., said the layoffs will affect corporate and international positions.
“The global health and economic crisis caused by the coronavirus pandemic has forced retailers to make difficult decisions,” said J.C. Penney CEO Jill Soltau. “For J.C. Penney, that includes reducing our footprint and accelerating our store optimization strategy while we implement our plan for renewal.”
The department store chain filed for bankruptcy protection in May and entered into a restructuring support agreement with lenders to reduce its outstanding $5 billion in debt and strengthen its financial position.
As part of its renewal plan, J.C. Penney is also considering potential buyers for the business and and a spin-off of its real estate division in a move to emerge out of the Covid-19 crisis in a stronger position. Private equity firm Sycamore Partners has reportedly been among the suitors mulling an acquisition or considering making an investment in the troubled retailer, should negotiations with its creditors break down.
Amazon.Com Inc. (AMZN), has also been touted to be interested in buying the ailing retailer in a deal that would bolster the world’s largest online retailer’s apparel business.
With shares down 76% this year, Wall Street analysts are sidelined on the retailer’s stock. (See J.C. Penney stock analysis on TipRanks).
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