Days After Pledging To Regain Customer Trust, J.C. Penney Reportedly Set To Talk With Creditors

J C Penney Company Inc JCP CEO Jill Soltau told The Business of Fashion in an interview published Tuesday she is looking to regain "the trust" of customers, vendors and investors.

Within days, a Bloomberg report said the company is in talks with creditors to negotiate breathing room.

The Interview

Soltau joined J.C. Penney as CEO last October, and one of her top priorities was to reach out to consumers to find out how they feel, BoF reported. A survey found that customers want an emotional connection with the stores where they shop.

By her own admission, Soltau said the department store "lost its sight" and doesn't have an answer for "who we're trying to be."

A long-term recovery is dependent on figuring out what the customer wants J.C. Penney to be and how it can be that company.

In the meantime, minor changes like upgraded try-on rooms are showing encouraging results, with a more than 30% increase in shopping basket size, according to BoF.

The company is hoping to leverage even the smallest amount of momentum to regain customers it lost over the years through making "a lot of promises" that were not kept, the CEO said. 

J.C. Penney will show up in a "way the customer hasn't seen in a long time" beginning as soon as the holiday season, she said. 

"It won't be perfect yet," Soltau said. "We have a long way to go, but our customer will feel the change."

Bloomberg: Breathing Room

Bloomberg reported Thursday that J.C. Penney is preparing to talk with creditors and enter new transactions that would ease its debt load and give management "more breathing room."

Sources close to the matter told Bloomberg the department store and some of its bondholders could soon sign non-disclosure agreements. 

The company is also working with restructuring advisers and investment banks to find ways of bolstering its balance sheet. The topic of bankruptcy is not part of the conversation, a source told Bloomberg.

The cost to protect J.C. Penney's debt against a near-term default has notably come down from $1.9 million for $10 million of debt in early August to $233,000, according to Bloomberg. 

"As a matter of policy, we do not comment on discussions with creditors and other partners," Sarah Holland, a J.C. Penney representative, told Bloomberg.

The stock was rallying by 14.28% to 92 cents at the time of publication Friday. 

Related Links:

JC Penney Reports Mixed Q2 Earnings

JC Penney Falls After Report Of Debt Restructuring Initiatives

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