HARLINGEN — Two weeks ago, Mayor Chris Boswell voiced a cautionary take on the reality of a post-pandemic world, when in a workshop with the Harlingen Economic Development Corp. he worried not all of the city’s big retail employers may come back.
Boswell, a member of the HEDC board, said, “My concern is I just hope JCPenney turns the lights back on in May, or Kohl’s turns the lights back on.”
News reports last week indicate JCPenney, which has had well-reported financial difficulties for some time, is exploring a Chapter 11 bankruptcy filing, which usually entails a number of stores — it has 850 —being pruned away.
JCPenney’s furloughed most of its hourly employees three weeks ago, and a few days later, began to furlough salaried employees. The company employs about 95,000 workers worldwide.
“We remain optimistic about JCPenney’s ability to weather this pandemic,” CEO Jill Soltau said in a news release at the time. “We also believe these short-term solutions will have a long-term benefit for our associates, customers, and key stakeholders as we look forward to the day that we reopen our doors.”
JCPenney is one of the last big anchors at Valle Vista Mall, which has its own financial problems. The loss of JCPenney’s, a major retail employer in the city, would hit the mall and city sales tax revenues hard.
The New York Post reported last week, citing confidential sources with knowledge of the company’s intentions, that although Plano-based JCPenney’s has enough cash on hand to survive for several months, the “company is contemplating a bankruptcy filing as one way to rework its unsustainable finances and save money on looming debt payments, which include significant annual interest expenses.”
Bloomberg News also reported last week that JCPenney’s has approached consultants Alix Partners to look at options for managing its debt. JCPenney’s has been in talks with its lenders and is negotiating a possible debt deal, Bloomberg said.
The department store chain had $3.72 billion in debt as of Feb. 1, with cash and cash equivalents of $386 million, according to its latest financial filing. Its 2019 sales fell 8 percent over the previous year to $10.72 billion.
JCPenney’s chief executive, Soltau, acknowledged in the news release her company is exploring ways to minimize a looming cash crunch.
“JCPenney has taken several actions to improve its cash position and financial flexibility during the pandemic, including deferring capital spend, utilizing funds available under the revolving credit facility, pausing hiring, cutting spending, reducing receipts, and extending the terms for payment of goods and services,” the company said.
While JCPenney’s is open for business for online shoppers, it remains to be seen if sales there will be enough to give company executives time to regain their footing once the pandemic has ended.
A JCPenney’s spokesperson declined an email request for comment for this story.