J.C. Penney shares fell 17% on Friday following a report that the 117-year-old dealer has hired advisers to help restructure his debt in an attempt to avert bankruptcy.
Stocks fell 18 cents to close at 90 cents. The stock had dipped as low as 88 cents earlier, or a decline of nearly 19% in the day. Since the end of 2018, the shares have traded below or just over $ 1 among management's unrest at the company and a challenging retail environment.
In a statement, J. C. Penney said that it routinely hires external advisors and that it has not hired counselors to prepare for court reconstruction or bankruptcy. "By working with some of the best companies in the industry, we take positive and proactive action, as we have done in the past, to improve the capital structure and long-term health of our balance," it said.
It is added that it does not "have any significant debt maturity in the short term, and we continue to maintain a strong liquidity position."
J.C. Penney has hired counselors to restructure debt as a way to buy time in the hope of reviving his business, according to Reuters, who quoted people to the situation. The company, which employs about 95,000 people in more than 800 stores, has about $ 4 billion in debt that will mature over the next few years, and a restructuring may mean delaying these maturities, the report says.
Even before the report negotiates struggling in the face of increased competition from Amazon, which grabs a larger share of shoppers' wallets and discount dealers such as Marshalls and TJ Maxx.
In October, J.C.Penney previously hired Jill Soltau, CEO of J-Sol, as his new top executive, with the goal of injecting new energy into their abrasive stores. So far, Soltau has built up the management team and refined the stores by getting rid of unprofitable things, according to Jeff Van Sinderen, an analyst at B. Riley FBR.
"Finally, for reverse work, JCP must become sustainably relevant with the target consumer to an extent that enables the company to generate sufficient cash flow to service / reduce its debt burden over the longer term," he wrote in a May note after the company's results in the first quarter.
7,000 store closures and counter
J.C. Penney's restructuring work is initially, according to Reuters, adding that the goal is to give the dealer more financial flexibility and to avoid bankruptcy on the road. The company is considering increasing extra money, including strategic options.
J.C. Penney is one of many retailers who have seen their fortunes fade as more consumers have turned to e-commerce. Brick-and-mortar large closures around the United States already exceed the pace of 201
More than 7,000 stores have closed their doors this year, according to Coresight Research. Last year, around 5,900 stores were closed and 3,300 opened.