No advisors hired for an in-court restructuring, bankruptcy

J.C. Penney on Friday afternoon said it hasn’t hired any advisors to prepare for an “in-court restructuring or bankruptcy.”

The statement followed a report Thursday evening that the embattled department store chain had hired advisers to explore debt restructuring options, potentially buying it more time for a turnaround.

“As a public company, we routinely hire external advisors to evaluate opportunities for the Company,” Penney said in a statement.

“By working with some of the best firms in the industry, we are taking positive and proactive measures, as we have done in the past, to improve our capital structure and the long-term health of our balance sheet. We have no significant debt maturities coming due in the near term, and we continue to maintain a strong liquidity position. Also, given our strong liquidity position we can confirm that we have not hired any advisors to prepare for an in-court restructuring or bankruptcy.”

Penney has roughly $4 billion in debt coming due in the next few years, with more than $1.5 billion currently available under a revolving credit line, according to SEC filings.

The Plano, Texas-based retailer’s sales continue to dwindle, as the company hasn’t been able to invest in the latest tech, modern fixtures and other ways to draw shoppers into stores. The department store sector as a whole is troubled, with more and more consumers shopping directly with brands like Nike and Kate Spade, bypassing wholesalers. Penney’s apparel business also hasn’t been able to keep pace with fast-fashion players like Zara.

Still pruning its real estate, Penney has said it plans to shut 18 of its department stores in 2019, with additional closures a possibility if the situation doesn’t improve.

According to the report on Thursday, Penney in recent weeks had been talking with lawyers and bankers who specialize in advising troubled companies on debt restructurings and other financial workouts.

Penney shares were down more than 17.5% by Friday afternoon to trade below $1. The stock is down more than 60% over the past 12 months. Penney’s stock, which has a market value of $285.5 million, sunk below a dollar in December 2018.