JCPenney is still a “work in progress.”
That’s according to co-parent Simon Property Group, which revealed in its first-quarter conference call with analysts that things are looking up for the formerly bankrupt department store — yet some hurdles remain.
Speaking with analysts, chairman, president and CEO David Simon suggested that JCPenney’s liquidity position was “strong,” with more than $1.2 billion of cash and credit availability, and that its balance sheet was in “very good shape.” Sales, he added, have also improved since the chain exited Chapter 11 proceedings in December.
“[We’re] very pleased with the JCPenney early results. They continue to be above our plan,” said the chief executive. “We continue to add new brands to the JCPenney portfolio, and we expect growth to be our focus going forward.”
Still, the Texas-based retailer is in “stabilization mode and capital preservation mode.” In the call, Simon noted that JCPenney must work on reestablishing relationships with vendors, who were initially hesitant to extend orders and risk losing millions of dollars ahead of a firm restructuring deal. But even after Simon and Brookfield Property Partners bought the chain out of bankruptcy, suppliers appear reluctant to advance shipments.
“We’re seeing more and more confidence from the vendor community,” explained Simon. “When you go through bankruptcy, not only [do] landlords get burned, but vendors get burned, and so it’s very important for us as new owners taking Penney out of bankruptcy that we give the vendors comfort that we’re going to be around.”
JCPenney also recently slashed 650 jobs across its stores, field operations and corporate headquarters — or about 1.5% of the chain’s workforce, which currently has more than 50,000 employees. According to the chain, the layoffs were made in order to “better meet our strategic priorities” under new ownership.
Separately, through its SPARC Group venture with Authentic Brands Group, Simon suggested that labels under the firm’s portfolio — which includes Forever 21, Lucky Brand and Brooks Brothers — could even end up in some of JCPenney’s 672 outposts across the country by next year.
“The first goal is to rightsize the company, strengthen the financial capabilities, repairing vendor relationships that we need to do, stabilize the morale and so on,” Simon added. “I’ve been proud of the execution and, so far, the results. Our plan is above where we thought it was going to be, so that’s very encouraging, but in order to turn JCPenney into a 21st century retailer, that’s still work in progress.”