Retail

JC Penney goes to court to try to stop Sephora from pulling out of the troubled chain's stores

Key Points
  • J.C. Penney has filed a temporary restraining order against Sephora.
  • It wants a judge to stop the makeup seller from leaving the retailer's stores.
  • Penney is in the process of reopening locations following Covid-19 shutdowns. 
Signage is displayed outside a JC Penney Co. store in Chicago, Illinois.
Christopher Dilts | Bloomberg | Getty Images

J.C. Penney is trying to avoid a major blow to its recovery prospects from the coronavirus pandemic — losing Sephora. 

The ailing retail giant has filed a temporary restraining order against Sephora in an attempt to prevent the makeup seller from leaving J.C. Penney stores, which are in the process of being reopened

"JCPenney filed a temporary restraining order so Sephora could not prevent JCPenney from reopening Sephora inside JCPenney (SiJCP) locations," Penney spokesperson Brooke Buchanan said in a statement Monday. "We remain committed to working together to drive sustainable, profitable growth, as SiJCP continues to be a beauty destination that serves millions of customers each year."

Sephora and Penney have had a joint enterprise operating agreement since Feb. 1, 2009, according to the April 27 court filing. Sephora was found to have "threatened imminent termination" of the contract, which would cause Penney to suffer "irreparable injury," including a loss of business opportunities, the filing said. 

A Sephora USA Inc. store stands inside the new J.C. Penney Co. store during the grand opening in the Brooklyn borough of New York.
Victor J. Blue | Bloomberg | Getty Images

"We have been in active discussions with JCPenney regarding our agreement for some time," Sephora said in a statement. "Although this is a sudden and unfortunate development, we are hopeful of continuing discussions and reaching an amicable agreement for both Sephora and JCPenney."

Penney's issues with Sephora are just the latest blow for the struggling retailer. Most of its stores have been closed since March 18 because of the coronavirus. Penney decided to furlough most of its hourly workers starting April 2. Only select stores are currently open, according to the company.

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The retailer also skipped a roughly $12 million interest payment due on April 15. Penney has grappled with debt payments as well as lagging sales since before the pandemic. The company is reportedly considering filing for bankruptcy protection

Sephora has had to shut stores as well amid the Covid-19 pandemic. Along with other beauty brands, Sephora shifted its focusing to promoting online sales.