SAN FRANCISCO (KRON) – J.C. Penney is considering filing for bankruptcy protection as it struggles to operate amid the coronavirus pandemic, according to a report.
The retailer is also reportedly exploring other options, including out-of-court debt restructuring, Reuters reports.
All J.C. Penney stores are closed due to the outbreak, and the retailer was considering bankruptcy to “rework its unsustainable finances and save money on looming debt payments” in hopes of continuing operations, acording to Reuters.
Furthermore, due to the store closures, J.C. Penney in addition to Macy’s and Nordstrom, have furloughed hundreds of thousands of workers.
It isn’t just J.C. Penney that’s struggling as the coronavirus pandemic grapples the US economy.
Overall, US retail sales plummeted 8.7% in March, an unprecedented decline, as the viral outbreak forces an almost complete lock down of commerce nationwide.
Department stores and mall-based chains have cut executive pay, suspended cash dividends and stock buybacks or repurchases to preserve cash. They’re also drawing down their credit lines to make sure they have a bigger pile of cash on hand.
The deterioration of sales far outpaces the previous record decline of 3.9% that took place during the depths of the Great Recession in November 2008.
Auto sales dropped 25.6%, while clothing store sales collapsed, sliding 50.5%. Restaurants and bars reported a nearly 27% fall in revenue.
U.S. consumer confidence has plunged and the vast majority of Americans are hunkered down at home under shelter-in-place orders.
Consumer spending drives two-thirds of the U.S. economy, and the record drop in retail sales is a symptom of the sharp recession that most economists believe the U.S. has already entered.
Economists at JPMorgan Chase now forecast the U.S. economy will shrink by a record-shattering 40% in the April-June quarter.
The Associated Press contributed to this report.