JCPenney files for bankruptcy; Oak Ridge store remains closed

Note: This story was last updated at 3 p.m. May 20.

Saddled with debt and already struggling, JCPenney filed for bankruptcy protection on Friday after closing its stores because of the COVID-19 pandemic, and the Oak Ridge store remains closed.

It’s not clear if or when the Oak Ridge store will re-open. It’s listed as temporarily closed.

Other JCPenney stores that are listed as temporarily closed in the area include locations in Turkey Creek in Farragut, West Town Mall in Knoxville, and Foothills Mall in Maryville.

JCPenney is the largest retailer to file for bankruptcy protection since the COVID-19 pandemic forced stores to temporarily close, according to CBS News.

There are only two JCPenney stores open in Tennessee. They are both near Nashville in Middle Tennessee. One is in Mt. Juliet, and the other is in Murfreesboro.

The company closed its stores and offices about two months ago, on March 18, because of COVID-19. It temporarily furloughed most hourly store employees starting April 2.

In a press release Friday, JCPenney said it will close stores in phases during its Chapter 11 bankruptcy. But details about the specific stores and their closing dates haven’t been announced.

JCPenney didn’t initially say how many stores might close, but over the weekend, there were reports that the company planned to close almost 30 percent of its 846 stores—about 192 stores by February and another 50 in 2022. That will leave the company, one of America’s most well-known chains, with just over 600 stores. Before the COVID-19 pandemic shut down the United States, JCPenney had announced plans to close six of its stores in April, according to CNN.

It wasn’t immediately clear this weekend how the potential closure of the Oak Ridge store, if it happens, would affect any further development of Main Street Oak Ridge. Construction of four new retail stores next to JCPenney, part of the second phase of Main Street, had already been suspended as retailers suffer through the COVID-19 pandemic.

JCPenney is one of the two department stores at Main Street Oak Ridge that were also tenants at the former Oak Ridge Mall. Belk is the other.

In its press release Friday, JCPenney said it had made significant progress on a transformation plan before COVID-19.

But the new disease, which can be deadly, has created “unprecedented challenges” and resulted in a “profoundly different new reality” for the retail industry in the United States, said Jill Soltau, JCPenney chief executive officer.

“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 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.”

USA Today reported that JCPenney had racked up $4.2 billion in debt, the second-most of any distressed retailer, trailing only Neiman Marcus. JCPenney lost money in eight of the last nine years, totaling $4.45 billion, the newspaper said.

Besides the pandemic, JCPenney is also reeling from the struggles of the department store industry, and the company has had declining sales and strategic missteps, USA Today reported. JCPenney had closed about 200 stores between 2009 and 2019, going from 1,047 locations to 845. The company has made mistakes as it tried to adapt to the digital age, and it has lost market share and shoppers as discount chains succeeded, foot traffic to malls declined, and off-price retailers emerged, USA Today said. The pandemic was the “proverbial last straw,” the newspaper said.

In its press release, JCPenney said some of its lenders have agreed to a restructuring plan that would reduce several billion dollars worth of debt. But that plan would require approval from a bankruptcy judge, and the judge could decide to force the retailer to go out of business if that’s in the best interest of the company’s creditors, USA Today said.

“Implementing this financial restructuring plan through a court-supervised process is the best path to ensure that JCPenney will build on its over 100-year history to serve our customers for decades to come,” Soltau said. “We believe the (restructuring support agreement) and the widespread support we have received from our asset-based lenders and first lien lenders will allow us to pursue a financial restructuring on an expedited timeframe. We are also encouraged by the level of support we have received from our vendor partners, landlords, and other stakeholders, whose confidence in our business and our people is expected to contribute to a successful reorganization.”

JCPenney filed for bankruptcy protection in federal court in Corpus Christi, Texas. The company has $500 million in cash and commitments from lenders for another $900 million to help the company get through its restructuring.

The company is the fourth national retailer to file for bankruptcy protection in May, CNN reported. The other three were J.Crew, Neiman Marcus, and Stage Stores.

During the bankruptcy process, JCPenney said it will continue to operate as one of the nation’s largest apparel and home retailers with hundreds of stores in the United States and Puerto Rico and electronic sales through its website.

The company said it is gradually re-opening stores and offices and continuing to offer curbside pickup service at the stores that are open.

It’s the second time in the past several years that JCPenney has announced that some stores would close. In March 2017, the company announced it was closing 138 stores across the United States as part of a “continuing effort to advance sustainable growth and long-term profitability.” The Oak Ridge store did not close at that time, but three Tennessee stores did, including one at Knoxville Center.

The JCPenney store was one of the original stores at what used to be the Downtown Shopping Center in Oak Ridge, according to Ray Evans, the city’s retail consultant. Evans has said that J.C. Penney himself cut the ribbon for the J.C. Penney store in Downtown Shopping Center, which opened in 1955. The property has been redeveloped twice since then, and it is now Main Street Oak Ridge.

J.C.Penney, the company, was founded in Kemmerer, Wyoming, in 1902 by James Cash Penney. The first store was named The Golden Rule. The company currently has about 90,000 employees.

Learn more about the JCPenney bankruptcy here, here, here, and here.