- J.C. Penney plans to furlough "the majority" of its hourly store associates beginning Thursday and a "significant portion" of its corporate staff beginning on April 5, the company said in a press release.
- The retailer is also extending its temporary store closures, without a stated re-opening date. "The Company will continue to follow guidance from local, state, and federal officials as it anticipates gradually reopening stores and offices in markets when it is safe to do so," Penney said.
- The company plans to continue paying benefits, including health insurance premiums, through the furlough. It noted those on furlough are eligible for unemployment benefits.
As COVID-19 continues its spread through the country, J.C. Penney joins a growing group of retailers extending their closures — this time without an end date in sight — and putting its employees on unpaid furlough as they try to manage a business with significantly less cash coming in from operations.
To raise or keep cash and liquidity, J.C. Penney has also drawn on its credit facility, put off capital spending, frozen hiring, cut spending, reduced receipts and extended vendor payments. Retailers across the spectrum have taken all or some combination of these measures to stay afloat during a time of mass store closures without precedent. (Others are also likely mulling skipping on rent.)
"These are difficult days all across the country and the globe. At JCPenney, we are making tough, prudent decisions to protect both the safety of our associates and the future of our Company," J.C. Penney CEO Jill Soltau said in a statement.
She added that the company is "optimistic" about Penney's ability to survive through the pandemic and that "these short-term solutions will have a long-term benefit for our associates, customers, and key stakeholders as we look forward to the day that we reopen our doors."
The pandemic, and ensuing mall and store closures, will likely land particularly hard on distressed retailers. That would include Penney, which has a large debt load, much of it leftover from the massive losses it took last decade under then-CEO Ron Johnson. The retailer has reportedly been looking to strike a restructuring deal with lenders, something that may be tougher now as the world economy and credit markets are rocked by the pandemic.
Penney's position was already precarious. One of the advantages executives have pointed to as its finances have come under strain is its liquidity, much of it owing to availability under its revolver, which Penney has tapped during the closures. Penney has enough available cash to make it through eight months, according to Cowen analysts. That is more than even some of its stronger competitors, including Macy's and Kohl's, have.
But the entire sector and retail in general face uncertainty in the near and longer term. Nobody knows yet when it will be safe to return to stores. Even less clear is the state of American consumers by then with recession looming and layoffs mounting, and whether they return to their old shopping habits once they leave their homes again.