J.C. Penney is running low on pennies. The storied, 118-year-old department store is preparing to file for bankruptcy as early as next week, Reuters reported Friday.
The rumor mill has been churning on J. C. Penney’s impending collapse for weeks now, but this is the most detailed report to date from “people familiar with the matter.” The company plans to close 200 of its roughly 850 stores across the country, sources told Reuters. And while the company has not made a decision on restructuring, the report said it’s discussing an option to split into two separate entities—one that would own real estate and serve as a landlord to the other, which would operate retail.
A J.C. Penney spokesperson declined to comment to Fast Company.
The Plano, Texas-based retailer is also reportedly in talks for a debtor-in-possession loan of $400 to $500 million. The company was already nearly $4 billion in debt leading into the coronavirus pandemic, as the rise of e-commerce and competition from bargain-buy chains such as T.J. Maxx and Marshall’s had slashed its revenue. In 2012, a failed experiment in eliminating coupons—part of an attempt by then-CEO and former Apple executive Ron Johnson to model JCP stores after Apple stores—resulted in backlash from customers, further piling on losses.
Sources told Reuters that the company missed a $17 million debt payment yesterday, and has been given five days until default. The company is also exploring deals that would prevent bankruptcy, they said.
The news comes a day after Neiman Marcus, another department store giant, declared Chapter 11 bankruptcy amid the coronavirus pandemic. And earlier today, CNBC reported that Stage Stores, a group of department store brands concentrated in rural and midsize markets, would likely file in the following weeks.
J.C. Penney’s stock was down more than 3% in midday trading, changing hands at just 18 cents per share—an 84% drop year-to-date.