Friday, May 29, 2020

J.C. Penney plans to have 500 stores open by next week and asked landlords to forgo rent

The Dallas Morning News
J.C. Penney said its stores are reopening at a faster pace now, and it has asked all of its store landlords for abatements on rent.

The Plano-based department store chain, which filed for bankruptcy earlier this month, said Thursday that it has opened 150 more stores and has 304 open in 27 states.

At a hearing Thursday morning, Penney’s attorney Joshua Sussberg of Kirkland & Ellis said the company plans to begin permanent store closings in June. The process will take 12 to 14 weeks, and Penney is hoping to capture the back-to-school season with sales at stores that are closing, he said. A smaller second batch of store closings will start in July. . . . more

Nordstrom touts its ‘flexibility’ as quarterly results miss targets; sales plunge 40%, losses top half a billion dollars

Seattle Times
Nordstrom insists it is well-positioned moving forward despite reporting a 40% drop in first-quarter sales and a loss of more than half a billion dollars in a coronavirus walloping far worse than analysts expected.

CEO Erik Nordstrom told analysts in a conference call after results were released Thursday that the company’s inventory reductions and increased online emphasis leave it with enough liquidity and flexibility as the nation begins to reopen. The company this month reopened nearly 40% of its stores — mostly in smaller markets — and implemented curbside pickup at most full-line locations after shuttering them in mid-March due to pandemic concerns.. . . more

Thursday, May 28, 2020

Retail Dive
Department stores are dropping like flies.

By interrupting whatever comeback plans they had — and each has been in repair mode in some way or another — the COVID-19 pandemic has pushed most if not all department stores to take drastic measures in recent weeks.

Commercial property research firm Green Street Advisors last month said it expects "a little more than half of all mall-based department stores" to close within two years, and for Penney alone to close "a lot, if not all" of its stores.. . . more

Abercrombie & Fitch Q1 loss widens, sales dive amid temporary store closings

Chain Store Age
Abercrombie & Fitch Co. reported earnings and sales that missed expectations as its stores remained dark due to the COVID-19 crisis. But business is picking up as its stores to reopen.

“With stores reopening in the U.S. and the EMEA regions, we have experienced sales productivity for reopened stores of approximately 80% and 60%, respectively, as compared to last year’s levels,” stated CEO Fran Horowitz. (As of May 28, about half of Abercrombie’s global store base has reopened.) . . . more

Wednesday, May 27, 2020

Macy’s real estate assets figure in its new refinancing plan

Chain Store Age
Macy’s has started refinancing procedures expected to see it through fiscal 2021.

The department store giant, whose business has plunged amid the COVID-19 pandemic, announced the offering of $1.1 billion in secured notes, which mature in 2025. Macy’s said it intends to use the notes, along with cash on hand, to repay the borrowings under its current $1.5 billion credit facility.

The debt will be secured by some of Macy’s real estate assets, including the company’s stores in downtown Brooklyn, Union Square in San Francisco and State Street in Chicago, in addition to 35 mall-based stores and 10 distribution centers. The assets are valued at about $2.2 billion.. . . more

A J.C. Penney REIT Is an ‘Odd Value Proposition’ in Today’s Climate. But its Stores Could Attract a Wealthy Buyer

NREI
Walloped by sagging sales and crippling debt, retailer J.C. Penney Co. Inc. wants to offload its real estate into a publicly-traded REIT as part of its Chapter 11 bankruptcy case. Some experts say this strategy could unlock the value of J.C. Penney’s properties and help it concentrate solely on selling apparel and other goods.

But will the REIT approach help keep the struggling department store chain in business?

Some observers are optimistic, hailing the proposed REIT as a smart move and a “pretty good bet.” Critics are dubious, calling the company-owned stores an “albatross” and labeling the REIT concept an “odd value proposition.”. . . more

Tuesday, May 26, 2020

PREIT CEO thinks J.C. Penney can stay alive with a scaled-down format

Chain Store Age
PREIT CEO Joseph Coradino, who several years ago began buying back department store space in the company’s malls and filling them with more viable retail concepts, now thinks we may not have seen the last of J.C. Penney.

“We were encouraged to see they worked through their Sephora issues and believe there is a place for a scaled-down Penney’s, so we look forward to working with them,” Coradino said during PREIT’s first-quarter earnings call on Thursday. . . . more

Saks’s Owner Denies Claim It Stripped Assets in Reorganization

NREI
Saks Fifth Avenue owner Hudson’s Bay denied allegations in a lawsuit that an internal restructuring amounted to a move to strip the company of its assets and impair collateral for a loan to subsidiaries of a real estate joint venture.

In a memo filed Saturday in New York in response to the lawsuit by U.S. lenders, the company called it “a transparent attempt to gain leverage in negotiations” with the borrowers, who are landlords of 34 Saks and Lord & Taylor stores. Owned by a Hudson’s Bay joint venture, they defaulted on $7.4 million of payments of a $846 million loan as retailers stopped paying rent after the coronavirus pandemic forced them to close, according to the document.. . . more

Thursday, May 21, 2020

Victoria's Secret to close about 250 stores in the U.S. and Canada, Bath & Body Works to close 50

USA Today
Victoria’s Secret plans to permanently close approximately 250 stores in the U.S. and Canada in 2020, its parent company L Brands announced Wednesday.

L Brands also plans to permanently close 50 Bath & Body Works stores in the U.S. and one in Canada, according to information the company posted online as part of its quarterly earnings. L Brands will discuss its earnings with analysts Thursday morning.

L Brands' total company sales declined 37% in the quarter that ended May 2. Almost all of the company’s stores have been closed since March 17 due to the COVID-19 pandemic. . . . more

Macy's warns of up to $1 billion quarterly loss due to lockdowns

Reuters
Macy’s Inc said on Thursday it could rack up operating losses of up to $1.11 billion in the first quarter, as the department store operator was forced to shut stores due to lockdowns aimed at curbing the spread of the new coronavirus.

The health crisis has forced brick-and-mortar retailers to tap credit lines, lay off employees and suspend dividends and buybacks in a bid to stay afloat amid store closures. . . . more

Wednesday, May 20, 2020

Ch. 11 is J.C. Penney's best shot at a turnaround, but it's not a sure one

Retail Dive
Since filing for bankruptcy, J.C. Penney executives have painted a picture of a hobbled retailer that was on the mend before the COVID-19 crisis hit.

"Before the pandemic, the Company had a substantial liquidity cushion, was improving its operations, and was proactively engaging with creditors to deleverage its capital structure and extend its debt maturities to build a healthier balance sheet," CFO Bill Wafford said in court papers. "Unfortunately, that progress was wiped out with the onset of COVID-19.". . . more

Tuesday, May 19, 2020

Report has Amazon in talks with J.C. Penney; bankrupt chain to close 242 stores

Chain Store Age
Amazon is said to be a contender for either all or parts of J.C. Penney, according to an exclusive report by WWD.

“There is an Amazon team in Plano [Tex.] as we speak,” said one source who does business with the online giant, reported WWD. “There is a dialogue and I’m told it has a lot to do with Amazon eager to expand its apparel business — for sure.”. . . more

Monday, May 18, 2020

Children’s Place sales down 38% in Q1; reopening stores in 10 states

Chain Store Age
The Children’s Place is beginning to reopen its stores as the COVID-19 pandemic continues to take a toll on its revenue.

The nation’s largest pure-play children’s specialty apparel retailer said its sales fell 38% to $254 million in the quarter ended May 2. To help fulfill surging online demand, Children’s Place enabled its ship-from-store capabilities in approximately 85% of its U.S. stores in late April, which more than doubled its daily shipping capacity. The retailer said its seond quarter digital demand is up more than 400% through May 16. . . . more

Bankrupted JC Penney plans to spin its properties into separate real estate company

CNBC
A piece of J.C. Penney’s proposal to emerge from bankruptcy includes spinning its real estate into a publicly traded real estate investment trust.

As part of a plan filed with the bankruptcy court, Penney would reorganize into a new retailer (“JCP”), along with a REIT that would collect rent checks from the retail business. Court documents say as much as a 35% stake in the newly created REIT could be sold to a third-party investor to raise cash, or to provide additional funding for the REIT. . . . more

Friday, May 15, 2020

IKEA's shopping malls arm Ingka Centres plans U.S. entry in major play

Reuters
IKEA’s shopping malls business, one of the world’s biggest, is looking to enter the United States in the next couple of years and is in talks to snap up central properties in major cities, its boss told Reuters.

Gerard Groener, managing director of Ingka Centres, which has 45 shopping centres in Europe, Russia and China, said his company was in several negotiations for inner-city real estate. . . . more

Thursday, May 14, 2020

Westfarms shopping center in West Hartford will reopen on May 20, mall officials said Wednesday, the first day retail stores and malls can operate following widespread business shutdown due to the coronavirus. But it’s unlikely all stores in the mall will open on the same day.

Hartford Courant
Westfarms shopping center in West Hartford will reopen on May 20, mall officials said Wednesday, the first day retail stores and malls can operate following widespread business shutdown due to the coronavirus. But it’s unlikely all stores in the mall will open on the same day.

While the facility itself is opening on May 20, individual stores inside will open on a case-by-case basis. According to a spokesperson for Taubman Centers, which owns and operates Westfarms and malls around the country, the company is seeing an average of 30 to 50% of stores inside their malls reopening. Westfarms recommends customers call ahead to see if specific stores will be open.. . . more

J.C. Penney pays out nearly $10M to execs as finances falter

Retail Dive
J.C. Penney is paying out millions of dollars in performance bonuses to its top executives as its stock nears $0 and the retailer reportedly drifts toward bankruptcy.

In a recent securities filing, the company said its board had approved changes to its compensation program that include pre-paid cash incentive awards worth a fraction of executives' target variable compensation.. . . more

Wednesday, May 13, 2020

“Czech sphinx” makes big bet on Macy’s

The Real Deal
Czech billionaire Daniel Kretinsky has acquired a 5-percent stake in Macy’s, with plans to work with management to turn around the struggling retailer as it prepares to reopen its stores.

Kretinsky, who has a net worth of about $3.4 billion and recovered from a coronavirus infection in March, is known as “Czech sphinx” for his inscrutable demeanor. He first built his fortune in the energy business, and his Energetický a průmyslový holding is now one of central Europe’s largest power companies. . . more

Neiman Marcus creditor calls for deal with Saks Fifth Avenue

Reuters
Hedge fund Mudrick Capital Management LP asked Neiman Marcus Group’s independent directors on Tuesday to explore a combination with rival department store chain Saks Fifth Avenue, challenging the company’s plan to reorganize under bankruptcy protection.

A lawyer for Mudrick, which holds portions of Neiman Marcus’s roughly $5 billion of debt, wrote in a letter to the directors that a sale or merger with Saks would result in better financial recoveries for creditors than the company’s current plan to restructure and hand control to senior lenders.. . . more

J.C. Penney Nearing $450 Million Funding to Navigate Bankruptcy

The Street
J.C. Penney reportedly is close to securing $450 million in funding that it will use to navigate a possible bankruptcy filing, marking what would be the third major U.S. retailer to fall victim to the coronavirus pandemic and ongoing economic shutdown.

Citing people familiar with the matter, the retailer is planning to file for bankruptcy as soon as this Friday, CNBC reported, though that timing could still be delayed. The company is considering closing 180 to 200 stores while in bankruptcy. . . . more

Tuesday, May 12, 2020

GNC says Ch. 11 is a possibility as pandemic hits sales and profits

Retail Dive
Nutrition supplement retailer GNC has been battered by the coronavirus pandemic, with its comparable sales down 10.1% in the first quarter, the company reported.

The company recorded a $157.5 million asset impairment related to disruption from COVID-19. That led to a net loss of $200.1 million for Q1, wider by more than 1200% than its net loss from the prior year.. . . more

Simon Property Wants to Reopen Malls, but Gets Stymied by Political Opposition

The Wall Street Journal
Simon Property Group is trying to open many malls as soon as it can, but some local politicians are stalling efforts to get many of them back in business.

In the past two weeks, the Indianapolis-based company had to backpedal on plans for reopening some of its properties in Indiana and New York, after local officials—especially in areas harder hit by the coronavirus—said it was too soon to allow people into malls. . . . more

Monday, May 11, 2020

J.C. Penney misses another debt payment as potential bankruptcy looms

Retail Dive
J.C. Penney has missed another payment on its debt, this one a $17 million interest payment on its senior secured loan facility due May 7, the company disclosed last week. Penney has a grace period of five days before it is in default, which the retailer said it is using "to evaluate certain strategic alternatives, none of which have been implemented at this time."

Reuters reported Friday that Penney could file for bankruptcy as soon as this week with plans to close around 200 stores.. . . more

Friday, May 8, 2020

Aldo Files for Bankruptcy Protection, Cites Deep Coronavirus Impact

Footwear News
The Aldo Group Inc. is the latest company to seek bankruptcy protection.

The Montreal-based retailer, founded in 1972, today announced that it has sought and obtained an initial order pursuant to the Companies’ Creditors Arrangement Act from the Superior Court of Québec. Aldo said it has “voluntarily” filed for “similar protection” in the United States — Chapter 15 bankruptcy — and is preparing to do the same in Switzerland. . . . more

Macy's delays first-quarter results to July 1, citing COVID-19 disruption

Reuters
Department store chain Macy’s Inc on Thursday delayed its first-quarter earnings report to July 1, citing significant business disruption due to the COVID-19 pandemic, which has also led to delay in financial statement preparation.

Macy’s, like many retailers, has had to close its stores, furlough employees, suspend dividend and tap into credit facilities to survive the financial hit caused by the lockdowns. . . . more

J.C. Penney misses another big interest payment but makes up with beauty partner Sephora

Dallas Morning News
J.C. Penney said it will not make a $17 million interest payment that’s due Thursday on its senior secured term loan. Under its loan agreement, Penney has a grace period of five business days to make the payment before the company is in default.

Penney put another skirmish to bed late Thursday. The retailer was scheduled to meet Sephora in U.S. District Court in Sherman on Friday. Instead, the two companies said they “reaffirmed” their 14-year partnership to operate Sephora shops inside more than 650 Penney stores. . . . more

A new bailout fund for retailers — this time from a big landlord

Boston Business Journal
Brookfield Asset Management, the Canadian investment group that is one of the largest operators of US shopping malls, is launching a $5bn rescue fund for retailers that need extra capital to weather the coronavirus pandemic.

It represents a significant commitment of capital to a sector that was contending with major changes in shopping habits even before governments shut shops and prompted nervous debate among retail executives about how soon customers would return. . . . more

Thursday, May 7, 2020

Neiman Marcus files for bankruptcy

Chain Store Age
In a move that was not unexpected, Neiman Marcus Group has filed for bankruptcy with an agreement that will eliminate about $4 billion of its debt and make its creditors the majority owners of its business.

Burdened with crushing debt and with its stores closed due to COVID-19, the luxury department store company is the second major retailer to file for bankruptcy during the pandemic, following a filing by J.Crew Group last week. . . . more

What Department Stores Will Be Left Standing After COVID-19?

NREI
The U.S. department store sector was in a downward spiral even before the COVID-19 pandemic hit as it faced declining foot traffic and falling sales.

Now the health crisis and its mandated shutdowns and social distancing—not to mention a deep looming recession—may put the final nail in the coffin for some department store retailers.

While some non-essential retailers are beginning to reopen in states easing their stay-at-home orders, experts say the pandemic will accelerate the decline of many department stores and the malls where they’re located.. . . more

Wednesday, May 6, 2020

Lord & Taylor to liquidate its stores as soon as they reopen

wincountry.com
Venerable U.S. retailer Lord & Taylor plans to liquidate inventory in its 38 department stores once restrictions to curb the spread of coronavirus are lifted as it braces for a bankruptcy process from which it does not expect to emerge, people familiar with the matter said on Tuesday.

Lord & Taylor's preparations to liquidate its inventory as soon as its stores reopen offer a window into the grim future of a high-profile retailer - a storied department store chain founded in 1826 and billed as the oldest in the United States - that does not expect to survive the pandemic's economic fallout.. . . more

Nordstrom permanently closing 16 full-line stores as it adapts to coronavirus era

Seattle Times
Nordstrom plans to permanently close 16 of its 116 full-line stores while moving toward a phased reopening of others, as it tailors its immediate future to the realities of retail in the coronavirus pandemic.

The Seattle-based company also said it will make changes to how its stores function in a “market-by-market” approach, and will move its big Anniversary Sale from July to August. . . . more

Tuesday, May 5, 2020

Express expects to reopen 300 stores by Memorial Day; to test curbside pickup

Chain Store Age
Express is the latest retailer to weigh in on its reopening plans for stores closed amid the COVID-19 pandemic.

The apparel retailer said it expects to reopen approximately 300 of its stores before Memorial Day, doing so in accordance with the latest federal and state guidelines and with adherence to new health and safety protocols. Beginning with a few stores that opened last week in Georgia and South Carolina, Express plans on taking a phased approach with the pace and staffing calibrated to mall traffic and consumer demand. . . . more

J.C. Penney files suit as Sephora looks to exit department store chain

Chain Store Age
J.C. Penney filed a temporary restraining order against Sephora in an attempt to prevent the LVMH-owned beauty giant from closing its in-store shops in J.C. Penney stores, some of which are being reopened, reported CNBC.

Sephora and Penney have had a joint enterprise operating agreement since Feb. 1, 2009. Sephora is Penney’s only beauty partner. There are about 600 in-store Sephora shops In Penney. Sephora reportedly wants to end the contract in April 2021, according to the Dallas Morning News. . . . more

Mall Owner That Spent Big to Modernize Faces Bill as Stores Sit Closed

The Wall Street Journal
A mall owner’s struggles to pay down debt show that investments to contend with online shopping risk leaving the industry more vulnerable during the pandemic recovery.

Pyramid Management Cos. of Syracuse, N.Y., which owns and operates 14 properties in New York and Massachusetts, said it has invested hundreds of millions of dollars in recent years to make its retail centers about more than shopping.

The privately held firm installed an 85-foot-tall indoor rope course in one mall and a 70-foot one in another. At some malls it added minigolf, popular themed restaurants like Margaritaville and comedy-and-dining club Levity Live. It also developed hotels near its malls in an effort to appeal to consumers beyond its local base. . . . more

Monday, May 4, 2020

Sephora is threatening to pull out of J.C. Penney stores

Dallas Morning News
Sephora is threatening to pull out of J.C. Penney stores on Tuesday and end the contract it has had with the department store retailer since 2009.

The Plano-based retailer has filed a lawsuit in state court seeking a temporary injunction.

Most of Penney’s stores haven’t reopened since they closed temporarily in mid-March because of stay-at-home rules. Sephora has threatened not to reopen its almost 600 Sephora shops inside Penney stores unless Penney agrees to shorten the contract term.. . . more

Malls re-open this week in Tampa and Atlanta

Chain Store Age
Florida and Georgia will see several malls re-opening this month.

Unibail Rodamco Westfield announced that its Tampa area malls in Brandon, Countryside, and Citrus Park, Fla., will be back in business on May 15.

“We are working closely with local officials and other relevant community groups to ensure a healthy, clean, and safe environment for our customers, tenants and employees,” said Patrick Madden, Westfield’s VP of shopping center management. . . . more

Macy’s will survive. It has a role to play in American retail, CEO Jeff Gennette says

CNBC
Macy’s often comes up when discussions turn to debate about which retailers will survive the coronavirus outbreak and the added stress it has placed the already challenged industry.

CEO Jeff Gennette is betting on survival.

After a virtual fireside chat with Gordon Haskett Research analyst Chuck Grom, in a candid phone conversation with Gennette, CNBC asked him simply: Can Macy’s survive this?. . . more

J. Crew Files for Bankruptcy in Virus’s First Big Retail Casualty

New York Times
J. Crew, the mass-market clothing company whose preppy-with-a-twist products were worn by Michelle Obama and appeared at New York Fashion Week, filed for bankruptcy protection on Monday. It is the first major retailer to fall during the coronavirus pandemic, though other big industry names including Neiman Marcus and J.C. Penney are also struggling with the toll of mass shutdowns.

J. Crew announced that its parent company, Chinos Holdings, had filed for Chapter 11 protection in federal bankruptcy court for the Eastern District of Virginia. As part of its financial reorganization plan, it will hand over control to top creditors, including the hedge fund Anchorage Capital, by converting $1.65 billion of its debt into equity. The company also plans to hold onto its Madewell brand, which it had considered spinning off into a public company.. . . more

Friday, May 1, 2020

J.C. Penney, Lenders Struggle to Find Assets to Back Fresh Loan

NREI
J.C. Penney Co. and the lenders it’s asking to finance a potential bankruptcy are struggling to find sufficient company assets to secure the additional debt, according to people familiar with the search.

With inventory going stale in idled stores and real estate valuations slipping amid the coronavirus pandemic, they’re recalculating the value of collateral that secures existing debt, and trying to determine whether the company can back another sizable loan, the people said. They asked not to be identified because the talks are confidential. . . . more

J. Crew is preparing for a bankruptcy filing that could come this weekend

CNBC
Clothing apparel company J. Crew is preparing for a bankruptcy filing that could come as soon as this weekend, people familiar with the matter tell CNBC.

Privately held J. Crew is working to secure $400 million in financing to fund operations in bankruptcy, said the people, who requested anonymity because the information is confidential. They cautioned that timing could still slip, and plans are not yet finalized. . . . more

As Stores Re-Open This Month Will Mall REITs Get Their Rent?

Globe St.
Retailers are tentatively re-opening the stores that were shuttered in mid-March due to Covid-19.

On Monday Macy’s is planning to reopen 68 department stores in states that will permit it. Then, over the next six weeks it plans to reopen all of its 775 stores, including its major flagships in Manhattan.

Even those retailers that are less bold are making plans for re-opening. Apple may open a few stores in the first half of May, Apple CEO Tim Cook told Bloomberg but “not a large number.” . . . more