J.C. Penney Says Bankruptcy Not in the Cards

Following reports that it had hired advisers to restructure its debt, J.C. Penney issued a statement saying that it “has not hired any advisers to prepare for an in-court restructuring or bankruptcy.”

“As a public company, we routinely hire external advisers to evaluate opportunities for the company,” said the statement, issued July 19. “By working with some of the best firms in the industry, we are taking positive and proactive measures, as we have done in the past, to improve our capital structure and the long-term health of our balance sheet. We have no significant debt maturities coming due in the near term, and we continue to maintain a strong liquidity position.”

Last Thursday, a Reuters story, quoting unnamed sources, reported that the struggling department store chain “has hired advisers to explore debt restructuring options.”

The news agency added: “JCPenney has in recent weeks held discussions with lawyers and investment bankers who specialize in advising troubled companies on debt restructurings and other financial workouts, some of the sources said.… The discussions with restructuring specialists reflect JCPenney’s resolve to take steps in coming months to increase its financial breathing room and avoid confronting a potential bankruptcy filing down the road, [one] source added.”

According to its latest financial results, the company’s long-term debt stands at $3.826 billion, down from $4.142 billion the prior year.

In its last quarter (ended May 4), the company’s same-store sales dropped 5.4%—though it singled out fine jewelry as one of its best-performing categories. It also posted a $154 million loss for the period, compared to a $78 million loss the prior year.

The department store currently comprises 860 U.S. stores. Last year, it hired Jill Soltau, former president and chief executive officer of craft retailer JoAnn, as its new chief executive officer.

Soltau has said she is “working to reestablish the fundamentals of retail at J.C. Penney.”

Top: J.C. Penney in Brooklyn, N.Y. (image courtesy of J.C. Penney)

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