J.C. Penney is planning to close 242 stores

The bankrupt department store is banking on e-commerce to make up the stores' shortfall.

J.C. Penney is planning to close 242 stores

J.C. Penney has filed its business plan in bankruptcy court, and it calls for a much slimmer department store chain in the future.

The company, which filed for Chapter 11 bankruptcy protection last week, said Monday it would close 242 stores, or 29% of its pre-bankruptcy fleet, and bank on e-commerce growth to help make up the shortfall.

Penney has not reported an annual profit since 2010 and has seen its revenue fall 80% since then, as it has lost market share to the likes of Target and T.J. Maxx, and to a lesser extent, to more direct rivals like Macy’s and Kohl’s. Only a few years ago, Penney had 1,100 stores, so the upcoming closures will only be the latest in the company’s efforts to find the right number of stores.

In its plan, filed with the court and with regulators, Penney did not identify which stores would close, but said 194 would shutter this year and another 50 would close in 2021. Penney also said that 116 smaller markets made up only 7% of sales, so those areas would be the focus.

The company, based in Plano, Texas, said in its plan that the 604 remaining stores were its “highest sales generating, most profitable” and represented 82% of stores sales last year.

Penney is hoping that e-commerce will help make up for the drop from store closures within a few years. Last year, 14% of its sales came from online orders, well below the rate at Kohl’s and Macy’s where it was about of quarter of sales. By 2024, Penney thinks it can hit $2.3 billion sales online, or 26% of sales, and gradually get close to the $10 billion total net sales mark in a few years.

The company, which for decades had a catalogue business that initially gave it a head start in the department store e-commerce wars, has fallen way behind rivals in recent years, hurt by weak search capabilities for items and poor integration of inventory management systems.

Given how rarely retailers with chronically declining sales pre-bankruptcy filing re-emerge from Chapter 11 protection rather than liquidate, Penney is under the gun to convince lenders it can make a go of it as a leaner, more focus retailer. The Wall Street Journal reported on Saturday that Penney’s bankruptcy lawyer warned the court that not proceeding quickly could be “disastrous” for the company.

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Ryanair Cuts Traffic Target By Almost 50% For Coming Year, Seeks To Reduce Boeing Plane Deliveries

Ryanair Holdings Plc (RYAYY) announced that it is slashing its annual passenger target by almost 50% due to stringent public health restrictions and amid expectations of a competitive ticket price Read More... The post Ryanair Cuts Traffic Target By Almost 50% For Coming Year, Seeks To Reduce Boeing Plane Deliveries appeared first on TipRanks Financial Blog.

Ryanair Cuts Traffic Target By Almost 50% For Coming Year, Seeks To Reduce Boeing Plane Deliveries

Ryanair Holdings Plc () announced that it is slashing its annual passenger target by almost 50% due to stringent public health restrictions and amid expectations of a competitive ticket price discounting environment.

Europe’s largest low-cost carrier, which plans to resume part of its flight schedule from July 1, said it expects to carry no more than 50% of its original second-quarter traffic target of 44.6 million passengers. Bookings will be impacted by public health restrictions, including temperature checks and face coverings for passengers and staff, as well as quarantine requirements, the company said. Ryanair also cut its FY21 passenger target estimate by almost 50% to 80 million passengers.

Commenting on the aviation landscape as traffic returns to scheduled flying from July, Ryanair contended that the competitive landscape in Europe will be distorted by unprecedented state aid under which over €30 billion will be given to the Lufthansa Group, Air France-KLM, Alitalia, SAS and Norwegian among others. Ryanair is not receiving any state aid.

“We therefore expect that traffic on reduced flight schedules will be subject to significant price discounting, and below cost selling, from these flag carriers with huge state aid war chests,” the company said in a statement.

Most of Ryanair’s fleet was grounded from mid-March by EU Government flight bans and restrictions due to the coronavirus pandemic. The groundings cut the airline’s March and full-year traffic by over 5 million guests and slashed FY20 profits by over €40 million, it said. The no-frills carrier said that passenger traffic in April declined 99.6% to 0.4 million customers. In the April to June quarter, Ryanair expects to operate less than 1% of its scheduled flying plan.

Ryanair shares rose 9% to $54.23 in pre-market U.S. trading as the company also announced a thorough cost-cutting plan. The low-cost carrier said that it is currently in negotiations with both Boeing () and Lauda’s A320 lessors to reduce planned deliveries over the next 24 months in light of slower traffic growth post-Covid-19 this year and in 2021. As part of a cost-cutting drive, the airline will cut at least 3,250 jobs, and it is also looking to pull out of some airports across Europe.

Since mid-March, Ryanair canceled share buybacks and deferred operating and non-essential capex spending.

“As a result, average weekly cash burn has dropped from €200 million in March to just over €60 million in May,” Ryanair said. “This liquidity will enable the Group to weather Covid-19. Our focus will remain on cash preservation/generation and the repayment of maturing debt over the next 24 months.”

Looking ahead, the carrier expects to record a loss of over €200 million in the quarter ended June 30, with a smaller loss estimate in the peak summer second quarter due to a substantial decline in traffic and pricing from Covid-19 groundings.

Shares in Ryanair have plunged 44% this year. TipRanks data shows that Wall Street analysts are cautiously optimistic about the stock as suggested by the Moderate Buy consensus outlook. The $65 average price target implies 31% upside potential in the shares in the coming 12 months. (See Ryanair stock analysis on TipRanks).

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The post Ryanair Cuts Traffic Target By Almost 50% For Coming Year, Seeks To Reduce Boeing Plane Deliveries appeared first on TipRanks Financial Blog.

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