JCPenney announced Friday that, despite rumors of a bankruptcy, it has made the $17 million interest payment that was due to debt collectors May 7. The company’s top executives were also recently paid millions as incentive for sticking with the struggling retailer.
Friday marked the end of the grace period that came after it had missed the payment. was in after it had missed the payment, according to the Dallas Morning News.
“The company had entered into such a grace period in order to evaluate certain strategic alternatives, none of which have been implemented at this time and which continue to be considered,” Penney said.
Other retailers, like J. Crew and Neiman Marcus, to file for bankruptcy protection, since the coronavirus pandemic has burdened businesses across industry, according to a report by CBS News.
Ahead of making the payment, CEO Jill Soltau received a $4.5 million bonus, according to the company’s May 10 regulatory filing. Other executive staff, like chief financial officer Bill Wafford, chief merchant officer Michelle Wlazlo and chief human resources officer Brynn Evanson, each got $1 million.
The Plano, Texas-enterprise has opted to use the payments as a way to ensure JCPenney can "retain and continue to motivate its named executive officers and other employees through the volatile and uncertain environment affecting the retail industry," according to a statement.
In June, Penney has a $105 million debt maturity, according to the newspaper. After that, its next big obligation is its $2.06 billion term loan that matures in 2023, which it has been trying to refinance. Then it has $400 million in notes due in 2025.
Credit: Justin Sullivan/Getty Images
Credit: Justin Sullivan/Getty Images
The 118-year-old company has faced significant hits to business as department stores and major malls have lost their spots as destination shopping for consumers. With COVID-19 spreading rapidly this spring, the brand was forced to furlough its nearly 95,000 employees and close all of its stores. That move has reportedly put J.C. Penney on the path to bankruptcy, with the company missing two debt payments in April and May, according to CBS News. The payment Friday has for now saved the retailer’s nearly 850 U.S. stores.
The Commerce Department’s report Friday on retail purchases showed a sector that has collapsed so fast that sales over the past 12 months are down a crippling 21.6%. The severity of the decline is unrivaled for retail figures that date back to 1992. The monthly decline in April nearly doubled the previous record drop of 8.3% — set just one month earlier.
Global financial firm UBS estimates that roughly 100,000 stores could shutter over the next five years.
“The whole economic model is unraveling,” Neil Saunders, managing director of GlobalData Retail. “This is going to be very painful. For some, it’s going to be fatal.”
Retailers, like a variety of businesses, are grappling with the toll of the state and local shutdowns of business. There have been a record loss of 36 million jobs over the past two months. With fewer people employed, retail purchases are sharply affected. .\
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