J.C. Penney Has Reopened many Stores: Is it A Bullish Sign?
There was a time when J.C. Penney Company Inc (OTCMKTS:JCPNQ) was regarded as one of the biggest departmental store chains in the United States, but things have soured over the past half a decade or so, and recently, the company declared bankruptcy.
The deadline for its Chapter 11 is approaching, but it seems that the company may be slowly coming back on track. On Wednesday, the company has part of a hearing at the Texas bankruptcy court, and J.C. Penny made a very telling announcement that could be seen as a major positive by market participants.
Reopened Nearly All Its Stores
The company announced that it has successfully reopened as many as 831 out of the total 850 stores it operates. Considering the fact that the stores had been closed since the middle of March, it is a significant boost to J.C. Penney and its cash flow. The company also revealed that the performance of the stores had surpassed expectations considerably, and now the company has as much as $900 million worth of cash in hand.
Earlier on, the retailer had projected that it was only going to have $100 million in hand. It goes without saying that it is a highly important revelation from the court proceedings and one that is going to be watched closely by analysts.
Joshua Sussberg, who is the company’s attorney from Kirkland & Ellis, stated that J.C. Penney has been successful in opening up some of the better performing stores, and hence, the revenues have been better as well. He went on to add that it is positive, and the trend is going to continue to be in the same direction going forward. That being said, investors should note that a sudden rise in the number of coronavirus cases in many states in the United States and that could be the source of some uncertainty for J.C. Penney.
The company needs to submit a new business plan by July 8, and the company’s lenders would need to approve the aforementioned plan by July 15. After J.C. Penney filed for bankruptcy, the company had stated that it plans to split its business into two entities. One part is going to be made up of its operating business, and the other is going to be a public real estate investment trust.
That being said, it should also be pointed out that J.C. Penney has also been considering an outright sale of the entire business and has already pitched it to many potential investors. In the end, the rise in revenues in recent times is a huge positive for the company and could prove to be a boost as it prepares to go into negotiations with all its lenders. Investors could do well to keep an eye on the developments.
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