Dive Brief:
- After a June rebound, J.C. Penney suffered heavy operating losses in July, according to a recent court filing.
- The department store retailer's operating loss came to $164 million in July on revenue of $564.3 million. That compares to operating profit of $79.3 million for June and is also more than double May's operating loss, which came amid store closures and depressed revenue. Net loss for July came to $342.1 million.
- The company's cash position remains relatively strong, with nearly $1.5 billion in cash and cash equivalents.
Dive Insight:
Lawyers for J.C. Penney indicated about a month ago that the retailer was moving swiftly to sell itself in Chapter 11. Since then, deadlines have been extended, anticipated hearings have ended without announcements, and a bankruptcy judge has made clear his impatience with the stakeholders fighting over the retailer's future.
According to news reports, a pair of Penney's major landlords — Simon Property Group and Brookfield Property Partners — are bidders for the retailer, along with private equity firm Sycamore Partners and Hudson's Bay Co., owner of Saks Fifth Avenue.
Penney and its lawyers have kept confidential who is interested in buying it, or which bid was at the top of the pack. According to Bloomberg, lenders sought higher bids from the suitors after initial offers came up short against the company's debt load.
Amid all that, Judge David Jones of the Southern U.S. district court in Texas called a status conference on Aug. 19, making no secret of his thoughts on the state of negotiations.
"At the initial hearings in this case, the Court expressed its concern about the proposed timeline in this case," Jones said in a court filing. "That concern has escalated due to the lack of progress in the sale process. Thousands of jobs and the very essence of the country's infrastructure are at risk. The parties have reached the end of the Court's patience. Negotiating postures and egos will be put aside."
Back in July, Penney had more cash on hand than it had anticipated and was called for in the budget worked out for its bankruptcy. That was owing in part to better-than-anticipated sales after the re-opening of Penney's stores following the COVID-19-related closures. Penney's sales have declined since June and its bottom line has swung back to a loss. Meanwhile, the days pass without word on the progress of negotiations.
J.C. Penney has a status conference set for late Monday morning.
