JCPenney has filed a temporary restraining order against beauty firm Sephora to stop it from departing Penney's stores that are currently closed but in the process of reopening.
JCPenney and Sephora have shared a joint enterprise operating agreement as of February 2009, CNBC reported, citing an April court filing. The filing said that Sephora had “threatened imminent termination” of the contract. That action would lead to “irreparable injury” for JCPenney, caused by a loss of commerce opportunities.
Most JCPenney stores have been shuttered since March 18 due to COVID-19. But spokeswoman Brooke Buchanan said in a statement that the chain "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.”
However, Sephora, which has also been forced to close retail locations during the coronavirus pandemic, said it's filed separate court papers to dismiss the case.
“While we greatly value our partnership with JCPenney and hope to get back to good-faith discussions about our agreement outside of legal channels, in order to protect Sephora’s legal position and to set forth an accurate record of our previous conversations, we have filed a motion to dismiss JCPenney’s misleading petition," the company said in a statement. "It is no secret that JCPenney has experienced financial challenges in recent years and it now faces the additional strains affecting all retailers in the wake of COVID-19. Given this reality, our focus has been on finding an amicable agreement with JCPenney regarding the future of our partnership, and these discussions have been undertaken with a sense of urgency as there is a potential impact to our business, our people and our brand partners."
As previously reported, JCPenney was mulling a bankruptcy filing after the coronavirus crisis shuttered its retail locations for a time and modified its turnaround plans. The retailer has enough cash to survive for the months to come, but is considering bankruptcy as a means of reconfiguring unsustainable finances and saving on future debt payments.
The outbreak has affected traditional operators of department stores in addition to other merchants that had to close. The retailer had not arrived at any final conclusions as to how to handle its strained finances, per a past report.