J.C. Penney announced Friday it has filed for bankruptcy, marking the largest retail industry casualty thus far during the coronavirus pandemic.
The 118-year-old department store had already racked up a substantial amount of debt in recent years, a situation that was exacerbated by the sharp economic fallout of COVID-19.
“The Coronavirus (COVID-19) pandemic has created unprecedented challenges for our families, our loved ones, our communities, and our country. As a result, the American retail industry has experienced a profoundly different new reality, requiring JCPenney to make difficult decisions in running our business to protect the safety of our associates and customers and the future of our company,” said CEO Jill Soltau.
The coronavirus pandemic has pushed many struggling companies over the edge and into bankruptcy.
Stay-at-home orders forced many nonessential businesses to close and weakened demand for all types of goods and services overnight.
During the past eight weeks, 36.5 million people have filed for jobless benefits. The slowdown has hit some industries harder than others.
The number of bankruptcy filings has risen sharply, with little revenue coming in, according to data from the American Bankruptcy Institute.
The group reported 560 commercial Chapter 11 filings in April, a 26% increase from last year.
J.C. Penney, one of the nation’s largest retail chains, has been suffering from declining sales for years and built up over $4 billion in debt.
The chain has long reportedly suffered from a lack of strategy to grapple with its burgeoning debt, leaving it on poor footing to deal with widespread closures forced by the coronavirus pandemic.
Companies that headed into this downturn without a financial cushion are already feeling the toll of the abrupt downturn.
That’s evident among retailers, which had been suffering from online competition and high debt prior to the pandemic.
Retail sales tumbled 16.4% in April, with clothing stores taking this biggest hit.
This month, Neiman Marcus and J.Crew have filed for Chapter 11 protection.
Gold’s Gym, the fitness chain, also filed for bankruptcy and plans to permanently close around 30 company-owned gyms.
Even industries on solid footing prior to the outbreak may be forever changed.
The cruise industry is a good example.
Would-be travelers may have a hard time shaking the images of the Diamond Princess, which had more than 700 passengers and crew infected with the coronavirus.