AMERICAN DEPARTMENT STORES J. C. PENNEY ARE AT RISK OF BANKRUPTCY

Coronavirus, which practically paralyzed the economy of the United States, leads to massive bankruptcies. At the same time, not only small entrepreneurs are forced to close their stores during the pandemic period, but also the large chains (Neiman Marcus, J. Crew, Hertz) are at risk of bankruptcy. The legend of American retail - J. C. Penney (or simply JCP) is preparing for bankruptcy, trying to go through a reorganization process.

Since the time when James Cash Penney opened the first store, subsequently having bought out the shares of his two partners, 118 years passed. Even the founder of Walmart, before the World War II, worked at one of JCP's outlets. The company experienced its take-off in the 1960s, when the various innovations (choosing goods from a catalog at home, discount centers) were actively introduced by the management, and the network chain have expanded, capturing new territories and market shares.

JCP has survived several major crises.

The first one happened in the 1970s, after the recession dropped the brand value by two-thirds. The second crisis of 2008 was associated with a scandal that led to the closure of several stores. Accused of a fraud with the search results of a store in Google, the shopping giant had to make excuses to the public. But will JCP survive the 2020 coronacrisis?

Last year, 865 outlets worked under the name of the brand. The sales reached $ 11.7 billion, about 85 thousand employees worked in the company. However, the outbreak of COVID-19 challenged the company's recovery plans - part of the staff had to be dismissed due to the need of cutting the costs as much as possible. And despite the fact that online trading persists, it does not bring a significant share of sales.

The experts believe that the company will soon begin bankruptcy proceedings and finally close about a quarter of its offline stores.

According to a number of American sources, filing for bankruptcy will allow the brand to limit the long-term decline that the JCP network has been struggling with for a long time. With a debt of nearly $ 4 billion, the retailer had to compete with both e-commerce companies and discount retailers. However, the pandemic has complicated many processes in the United States, including the possibility of declaring bankruptcy.

Social distancing makes the free sale of assets impossible for the companies in difficult situations. But this could help them to stay afloat for at least some time in order to save the jobs. It is known that on April 15, JCP was unable to repay interest on the loans and did not find any financial support.