JC Penney Lawsuit: Why The Struggling Retailer Is Suing Sephora

JC Penney’s (JCP) woes continue as the retailer has engaged in a lawsuit with Sephora, which is reportedly looking to pull out of its stores.

The lawsuit, filed by JC Penney, claims that losing Sephora will cause major financial impact on the company’s recovery during the coronavirus pandemic, CNBC reported. JC Penney is in the process of re-opening its stores in markets, where stay-at-home orders have eased, and nonessential businesses are allowed to re-open.

JC Penney was forced to close all of its stores in March because of the COVID-19 crisis, furloughing the majority of its workers the following month. The retailer also skipped a $12 million interest payment in April and is reportedly considering filing for bankruptcy protection.

As part of its lawsuit, JC Penney reportedly has filed a temporary restraining order to block Sephora from leaving its stores, which it said in its complaint “threatened imminent termination” of the contract that could cause the company “irreparable injury.”

Brooke Buchanan, a JC Penney spokesperson, told the news outlet in a statement that “JCPenney filed a temporary restraining order so Sephora could not prevent JCPenney from reopening Sephora inside JCPenney (SiJCP) locations. 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.”

In a statement to the news outlet, the beauty retailer said, “We have been in active discussions with JCPenney regarding our agreement for some time. Although this is a sudden and unfortunate development, we are hopeful of continuing discussions and reaching an amicable agreement for both Sephora and JCPenney.”

Shares of JC Penney stock were down 0.91% as of market close on Monday.