Sales at J.C. Penney have fallen annually since 2016. Its roughly 860-store footprint is less than a quarter of its store base in 2001. The company's nearly $11 billion in sales for the last fiscal year are almost a third of its sales that same year.
The Plano, Texas-based retailer, which was founded more than a century ago, employed roughly 90,000 full- and part-time workers as of February.
"The Coronavirus (COVID-19) pandemic has created unprecedented challenges for our families, our loved ones, our communities, and our country. As a result, the American retail industry has experienced a profoundly different new reality, requiring JCPenney to make difficult decisions in running our business to protect the safety of our associates and customers and the future of our company," CEO Jill Soltau said in a statement.
"Until this pandemic struck, we had made significant progress rebuilding our company under our Plan for Renewal strategy – and our efforts had already begun to pay off," Soltau's statement said. "While we had been working in parallel on options to strengthen our balance sheet and extend our financial runway, the closure of our stores due to the pandemic necessitated a more fulsome review to include the elimination of outstanding debt."
The retailer said it has commitments for $900 million in financing from its existing first lien lenders to fund bankruptcy, which includes $450 million of new money. It had approximately $500 million in cash on hand as of the Chapter 11 filing date.
In bankruptcy, the retailer said it will "reduce its store footprint" in phases. It will disclose specific store details and timing in the coming weeks. CNBC previously reported that the retailer is making plans to close 180-200 stores.
J.C. Penney said in a release it will open select stores and continue to offer contact-free curbside pickup service at all open stores. Its eCommerce distribution will continue to fulfill online orders, and customer care centers are answering inquiries as usual.
It said it will continue to work toward a strategy to refocus on stores heralded by Soltau in efforts to continue its attempted turnaround in bankruptcy. That will include "reestablishing the fundamentals of retail, re-envisioning its merchandise offerings, and rolling out new innovations."
J.C. Penney joins fellow department store chains Neiman Marcus and Stage Stores as victims of the pandemic, which has forced their doors shut and exacerbated problems that existed before the virus started spreading. Department stores have struggled to maintain a foothold in U.S. retail. Brands have sidestepped them by selling to shoppers directly. Online retailers have lured shoppers away from malls in which many department stores are based.
The retailer dates back to 1913, when James Penney converted a chain of 34 stores into the J.C. Penney company. J.C. Penney offered rural America their first depot, providing farmers and others a one-stop-shop to buy essential goods at bargain prices. By 1928, it worked its store base up to 1,000 stores — a year before the company went public, and the Great Depression.By 1994, the retailer had $20.4 billion in retail sales, with net income nearing $1 billion.