Can J.C. Penney make it without Sephora?
J.C. Penney has had its share of problems in recent years, but a positive constant for the chain have been the Sephora shops operating inside its stores. Now, however, Sephora wants out.
The beauty chain threatened to refuse to reopen its Sephora Inside J.C. Penney shops (SiJCP) unless the department store retailer agreed to shorten the current deal, which has about four years remaining on it, to April of next year.
Penney went to court last week to file a restraining order against Sephora. It received a temporary order issued by a state court in Texas. Sephora responded by filing its own suit against Penney in federal court.
In its suit against Sephora, Penney argued that the beauty chain has threatened immediate termination of the contract between the two parties. Doing so would cause the department store chain “irreparable” harm to its business.
Penney, which posted a 7.7 percent decline in same-store sales in the last fiscal year, was expecting sales to drop between 3.5 percent and 4.5 percent this year before it was forced to close stores across the country due to the coronavirus pandemic.
In a statement regarding its current dispute with Sephora, Penney spokesperson Brooke Buchanan said, “We remain committed to working together to drive sustainable, profitable growth, as SiJCP continues to be a beauty destination that serves millions of customers each year.”
“We have been in active discussions with J.C. Penney regarding our agreement for some time,” Sephora said in a statement. “Although this is a sudden and unfortunate development, we are hopeful of continuing discussions and reaching an amicable agreement.”
In February, Sephora announced it planned 100 new store openings in North America this year. The chain said it was focused on non-mall locations so that it could place itself closer to where its “customers live and work.”
- Sephora is threatening to pull out of J.C. Penney stores – The Dallas Morning News
- JC Penney goes to court to try to stop Sephora from pulling out of the troubled chain’s stores – CNBC
- C. Penney Company, Inc. Reports Fourth Quarter and Full Year 2019 Financial Results – J.C. Penney Company, Inc.
- Are strip centers where it’s at for Macy’s and Sephora? – RetailWire
- What will it take to fix J.C. Penney’s shrinking sales problem? – RetailWire
DISCUSSION QUESTIONS: What do you think is at the heart of the current dispute between Sephora and J.C. Penney? What would the loss of Sephora shops mean for Penney’s business?