Struggling retailer JC Penney has reportedly borrowed around $850 million in an effort to increase inventory and pay for working capital requirements.
The company is using some of the money it drew from its line of credit to roll out a new and improved home department. The revamped section is expected to arrive in nearly 500 stores at some point next month.
It’s believed that JC Penney has until April of next year to repay the $850 million it borrowed to help keep the stores on-track.
CFO said in a recent statement:
“As we near completion of the home department transformation in over 500 stores, we have been undertaking and will continue to experience a significant inventory build and increase in capital expenditures. The draw under our revolver today provides more than our current funding needs to ensure our continued liquidity. Moreover, we will continue to explore additional capital raising alternatives with the assistance of our financial advisors.”
The year hasn’t gotten off on the right foot for the folks at JC Penney. Chief Executive Officer Ron Johnson left the company earlier this month after failing to get the retailer back in working order. Former CEO Mike Ullman was rehired to fix several lingering issues.
Although the company will once again include coupons in newspaper ads, Ullman said that JC Penney wasn’t entirely switching back to the way it was before he parted ways with the company.
“I wouldn’t recommend that we go back to the way JC Penney was when I left. Things change,” he explained to The Wall Street Journal.
Do you still shop at JC Penney? Are you surprised that the company decided to borrow $850 million in order to help boost inventory and cover the cost of operation?