Arkansas will be home to nine JC Penney stores after the company closes four locations in the state as part of the Plano, Texas-based retailer’s Chapter 11 bankruptcy. The four are part of a first round of 154 stores set to close in the next four months.
The private equity firm Sycamore Partners is reportedly in early talks to take the retailer out of bankruptcy should it fail to negotiate with its creditors, according to a report from Reuters.
JC Penney filed bankruptcy last month after failing to make interest payments attributed to the coronavirus disruption which closed stores for more than two months. The company said it plans to close 242 stores this year with the first round of 154 expected in the next 16 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 CEO Jill Soltau.
Following are the Arkansas stores slated for closure in the first round.
• Batesville at Independence Center
• Conway at Conway Towne Center
• El Dorado at Mellor Park Mall
• Harrison at The Fashion Center
Most stores, such as those in Rogers, Fort Smith and Fayetteville, have recently reopened with reduced hours from 12 p.m to 7 p.m. Monday through Saturday and 11 a.m. to 6 p.m. on Sunday.
Working through its bankruptcy, JC Penney recently got approval from the court to access more than $450 debtor-in-possession funding from its primary lien holders.
“We are pleased to have received court approval to access $450 million in new money, $225 million of which will be drawn immediately,” Soltau said. “This is a positive step forward that will help us execute our Plan for Renewal and store optimization strategy, continue working seamlessly with our vendor partners, fund our ongoing business operations, and continue our focus on further developing the company’s go-forward business plan to successfully restructure JC Penney.”
There have been a few interested parties in reportedly in talks with JC Penney including Amazon’s interest in shuttered warehouses and store locations. Reuters reported JC Penney is also in talks with some of its landlords, including Brookfield Asset Management and Simon Properties about possible deals. This is an addition to the Sycamore Partners’ interest to take the company private should other options not work out.
Jan Kniffen, the founder of J. Rogers Kniffen Worldwide, said the JC Penney brand will likely survive bankruptcy but it will be a leaner company with far fewer stores. He said mall operators like Simon Property and General Growth Partners have a history of buying troubled specialty brands (mostly teen retailers) to keep them alive and operating within beleaguered mall spaces. He’s not so sure JC Penney is considered a specialty retailer, as it’s more of a traditional department store.
Kniffen expects up to one-third of the malls across the U.S. to shutter in the next year or so as the recovery from COVID-19 disruption will likely take seven quarters given the U.S. is in a recession.
Other Texas-based retailers Stage Stores, Pier One Imports,Tuesday Morning and Neiman Marcus have also each filed bankruptcy in recent months. Pier One will shutter all of its stores, Stage Stores is also in the liquidation phase of 550 of its 738 Gordmans and other branded stores. Tuesday Morning will shutter about one-third of its 700 stores.