Report: J.C. Penney to Hire Advisors as It Mulls Debt Management Options

NEW YORK, United States — J.C. Penney Co Inc has approached consulting firm AlixPartners LLP as the U.S. retailer looks at options for managing its debt, Bloomberg News reported on Tuesday, citing people with knowledge of the matter.

Brick-and-mortar retailers are struggling to keep up with the shift to online shopping, and the crisis has been exacerbated by the coronavirus outbreak that has forced them to shutter stores and furlough employees.

Reuters reported last week that Macy's Inc, the largest US department store operator by sales, had hired investment bank Lazard Ltd to explore options for bolstering its finances.

J.C. Penney has been in talks with lenders in recent weeks about its liquidity needs and is negotiating a possible debt deal, the Bloomberg report said.

Last year, J.C. Penney reportedly held discussions with lawyers and investment bankers who specialise in advising troubled companies on debt restructurings and other financial workouts to help the retailer forge a turnaround amid intense competition and falling sales.

The department store chain faces fierce competition from discount retailers and has struggled to boost the profile of its e-commerce business to rival established players including Amazon.com Inc.

The company also furloughed a majority of its hourly staff and salaried associates last month, as it was forced to extend closures due to the health crisis.

The retailer had $3.72 billion in borrowings as of February 1, its latest annual filing showed, with cash and cash equivalents of $386 million. Its 2019 sales fell 8 percent to $10.72 billion compared with the previous year.

The company's combined credit score, which measures on a scale of 100 to 1 how likely a company is to default on its debt in the next year, was "1", according to Refinitiv Eikon data, indicating it was expected to default.

J.C. Penney declined to comment. New York-headquartered AlixPartners was not immediately available for a comment.

The retailer's shares, which rose initially amid broader market gains, were down about 1 percent.

By Pushkala Aripaka and Nivedita Balu; Editor: Ramakrishnan M. and Vinay Dwivedi.