J.C. Penney shares fell 17% on Friday, after it was revealed that the 117-year-old retailer had hired consultants to help restructure his debt to avert bankruptcy.
The shares fell by 18 cents and closed at 90 cents. The stock had fallen 88 cents the day before, down nearly 19%. Since the end of 2018, the stock has been trading at below or slightly above $ 1, as the company has been rioting in a challenging retail environment.
In a statement, J.C. Penney says that it "routinely" hires external consultants and that it does not hire consultants to prepare for legal restructuring or bankruptcy. "By working with some of the best companies in the industry, as in the past, we are taking positive and proactive steps to improve our capital structure and the long-term health of our balance sheet," it said.
She added that "there are no significant maturities in the short term and we still have a strong cash position".
J.C. According to Reuters, Penney hired consultants to restructure debt to save time for the revival of his business. The company, which employs approximately 95,000 people in more than 800 stores, has debts of approximately $ 4 billion due in the coming years, and a restructuring could delay these maturities, the report said ,
Retailers struggled in the face of increasing competition from Amazon, which consumes a larger proportion of wallets from buyers and discounters such as Marshalls and TJ Maxx.
In October, J.C. Penny hired Jo-Ann Stores' former CEO, Jill Soltau, as a new executive with the goal of bringing new energy to the battered stores. According to Jeff Van Sinderen, an analyst with B. Riley FBR, so far Soltau has been building its management team and refining the store inventory by getting rid of unprofitable items.
"Ultimately, for the turnaround to work, JCP must be of sustained relevance to the target consumer, allowing the company to generate adequate cash flow to service / reduce its debt burden in the longer term," he wrote a May announcement after the company's first-quarter results.
7,000 shop closings and counting
J.C. According to Reuters, Penney's restructuring efforts are still at an early stage. The aim is to offer the retailer more financial flexibility and to avoid later bankruptcy. The company is considering raising additional cash in addition to other strategic options.
J.C. Penney is one of many retailers whose fortunes have waned as more consumers turned to e-commerce. The closure of brick-and-mortar stores in the US already exceeded the pace of 201
According to Coresight Research, more than 7,000 retail outlets have closed their doors this year. Last year, around 5,900 stores closed and 3,300 opened.