J.C. Penney has been rescued from bankruptcy, but challenges remain for the beleaguered retailer.
The department store chain completed the sale of its retail operations to Simon Property Group and Brookfield Asset Management on Monday, Bloomberg News reported. J.C. Penney will essentially be split into two: an operations firm led by Simon and Brookfield, and a property one that its lenders will control. The former is now out of Chapter 11 bankruptcy, while the latter will not be fully organized until next year, according to Bloomberg.
While the retailer was hit hard by the pandemic, its issues predate the Covid-19 outbreak — namely debt, as well as a decline in sales as shoppers turned to other stores and e-commerce.
Still, with one of those issues gone, there may be some hope for a renewed J.C. Penney.
“The brand still has value and Soltau’s initiatives are on the mark to improve results,” said Poonam Goyal, who follows the retail industry for Bloomberg Intelligence. “Debt was its biggest issue, so if it can start with a clean slate, the retailer can find ways to reclaim itself.”
The agreement is also helpful for Simon and Brookfield, both of whom have experienced issues at their malls as other retailers close or declare bankruptcy.
“They basically got a low-cost option on what they can do with all those JCPenney properties,” Jan Rogers Kniffen, a former department store executive and founder of the consulting firm that bears his name, told Bloomberg. “If you’re in that mall, you’re certainly better off with JCPenney operating than with a dark box.”
[Bloomberg News] — Sasha Jones