Jewelers who misinterpret the state of the jewelry market risk employing the wrong retail strategy, cautions columnist Sherry Smith.
Here’s the Latest on Neiman Marcus, JC Penney Bankruptcies
The retailers filed for bankruptcy protection for similar reasons, including mounting debt and the toll the coronavirus has taken on business.

New York—The list of retail bankruptcies has grown longer as the COVID-19 pandemic takes its toll on already-struggling retailers.
It recently claimed department store heavyweights Neiman Marcus and J.C. Penney, both of which have been struggling under mounting debt.
The two are aiming to reorganize and bounce back, reopening locations as coronavirus restrictions ease.
Here are the latest developments.
Neiman Marcus
Neiman Marcus filed for Chapter 11 bankruptcy protection in May with plans to reorganize and emerge from bankruptcy by the fall.
The Dallas-based retailer has been grappling with mounting debt followed by disruptions related to the coronavirus pandemic, including temporary store closures and the furloughing of 14,000 employees.
The U.S. Bankruptcy Court for the Southern District of Texas, Houston Division recently approved the retailer’s access to its debtor-in-possession financing, a type of financing extended to companies in distress overseen by the lender and subject to court approval.
Neiman Marcus secured $675 million in debtor-in-possession financing from its creditors to keep itself afloat through bankruptcy.
With the court’s approval, it can use $250 million now and an additional $150 million as needed after Sept. 4.
It had previously received interim approval for the use of $275 million.
“This financing provides us with ample liquidity to ensure business continuity as we gradually reopen our stores, invest in fall inventory, and fund the expansion of our digital offerings as we continue our journey to become the preeminent luxury customer platform,” said CEO Geoffroy van Raemdonck in a press release.
He reiterated the company is on track to emerge from bankruptcy this fall.
Of the retailer’s 43 stores, two have reopened to customers, NorthPark Center in Dallas and Lenox Square in Atlanta, according to a report by The Dallas Morning News.
Around 90 percent of its stores are open by appointment or offering curbside pickup, as per the report.
J.C. Penney
J.C. Penney filed for Chapter 11 bankruptcy protection shortly after Neiman Marcus and for similar reasons.
The Texas-based retailer has its own struggles with growing debt and the effects of the coronavirus pandemic.
The department store chain, like so many others, temporarily closed its more than 850 locations and furloughed most of its 85,000 workers.
Approximately 85 percent of its cash flow “evaporated overnight,” CFO Bill Wafford said in a court filing.
The retailer asked landlords to defer rent for June and July and requested rent abatements for June, July, and August, according to a report by The Dallas Morning News.
More than 500 of
As some locations reopen, others will close for good.
The retailer first announced store closures in May and confirmed in June that 154 locations would be permanently closed.
Store closing sales began June 17 at 136 stores, with the company noting in a blog post some stores previously on the list “remain on hold pending further review.”
The retailer’s fine jewelry offerings will be 40 percent off the original price, according to a press release from financial advisory firm Gordon Brothers.
The firm is orchestrating the liquidation sale alongside Hilco Merchant Resources, Tiger Group, and Great American Group, a B. Riley Financial company.
In National Jeweler’s 2019 State of the Majors report, J.C. Penney stood at No. 9 on the list of $100 Million Supersellers, with an estimated $816 million in annual jewelry and watch sales.
The retailer has received commitments for $900 million in debtor-in-possession financing, including $450 million in new funds from existing first lien lenders.
The U.S. Bankruptcy Court for the Southern District of Texas, in Corpus Christi, Texas, recently approved J.C. Penney’s access to the financing.
The retailer can use $225 million now and an additional $225 million as needed after July 15, subject to certain conditions. Another $53 million is available following an agreement made between the company and a group of lenders.
The company had previously received approval to use its $500 million in cash collateral.
Soltau said the development was “a positive step forward” as the company focuses on its restructuring.
Its potential reorganization plans include splitting itself into two parts: a retailer and a real estate investment trust (REIT), a separate division that would own and/or operate a portfolio of real estate as a source of income.
Its real estate portfolio is valued at $1.4 billion when its stores are operating and $704 million when they’re not, said Kirkland & Ellis attorney Joshua Sussberg during a court hearing, as per a CNBC report.
The retailer could sell as much as a 35 percent stake in the REIT to third-party investors to raise money or to provide funding for the REIT, as per court documents.
J.C. Penney’s reorganization plans may morph into sales plans if the retailer can’t work out an agreement with its lenders.
The company is sitting on nearly $5 billion in debt and is in talks with its lenders about giving up control of the company in exchange for a reduction in its debt, as per a Reuters report.
For that to happen, the various firms who have provided financing and hold the retailer’s debt will have to agree to J.C. Penney’s business plan by July 14.
If the retailer can’t convince enough lenders to agree by the next day, July 15, it will have to ditch its reorganization plans and look for a buyer.
Sources told Reuters private equity firm Sycamore Partners may be interested in an acquisition if J.C. Penney can’t reach a deal with its creditors.
Sycamore recently terminated a $525 million deal for a majority stake in L Brands’ Victoria’s Secret.
The Reuters report also stated the retailer was said to be in contact with landlords Brookfield Asset Management and Simon Property Group, discussing the possibility of a joint bid with Sycamore for J.C. Penney.
Ultimately, speed is essential to a successful reorganization, CFO Wafford said in his court declaration, stressing the retailer’s “long-term success hinges on its ability to successfully emerge prior to the back-to-school season.”
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