The situation at troubled retailer JCPenney got more serious as the company missed a $12 million debt payment due Wednesday.
The company said that it has a 30-day grace period to make the payment.
"JCPenney made the strategic decision to ... take advantage of the 30-day grace period to continue ongoing discussions with lenders and maximize financial flexibility," said the company's statement. "JCPenney has been engaged in discussions with its lenders since mid-2019 to evaluate options to strengthen its balance sheet, a process that has become even more important as our stores have also closed due to the pandemic."
Shares of JCPenney were down as much as 36% in morning trading on those reports before they came off the lows to fall only 10% in early afternoon trading. But news of the missed payment sent shares lower again, as they closed down 27%.
JCPenney said it was doing well with its turnaround plans until it was forced to close its stores during the coronavirus outbreak.
"The company successfully met or exceeded guidance on all five financial objectives for 2019," said the company's statement. "We remain focused on our plan for renewal, and look forward to when we reopen our doors."
JCPenney was facing trouble even before the coronavirus crisis, with a crushing debt load of $3.7 billion in debt at the end of 2019. Although JCPenney has enough liquidity to survive the next several months, it may face challenges refinancing its debt in the future, said David Silverman, senior director at Fitch Ratings.
"There's a good chance they can survive, but this is no layup," said Craig Johnson, president of Customer Growth Partners. "This is going to be a three-pointer deep in the corner with time running out." JCPenney will need to drastically reduce its 850 stores, Johnson added.