Please ensure Javascript is enabled for purposes of website accessibility

J.C. Penney Faces Loss of Sephora As It Prepares to Reopen Stores

By Rich Duprey – May 6, 2020 at 12:41PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Makeup specialist wants to end their relationship by next year.

J.C. Penney (JCPN.Q) faces a new coronavirus pandemic crisis as it prepares to open a handful of stores following the closure of all 850 locations in March. 

Makeup giant Sephora has been issuing an escalating set of demands to the troubled department store chain before it opens its store-in-store boutiques, but also wants to end the relationship it has with the retailer.

Woman have makeup applied

Image source: Getty Images.

Putting lipstick on a pig

J.C. Penney is suing the beauty supplies company to force it to open its boutiques when the retailer begins opening its stores. It offers curbside pickup at a few dozen locations, but Sephora says it's not opening any stores until at least May 22. After complaining about its employees being furloughed during the pandemic, Sephora said it wants J.C. Penney to use a special electrostatic spray to clean the counters before it does, according to a Bloomberg report.

The department store operator faces the risk of default on its loans as it may skip an interest payment on its debt, though it did pay its rent the month before. Sephora, which is owned by luxury conglomerate LVMH Moet Hennessy Louis Vuitton (LVMUY 8.30%), is threatening to halt all shipments of beauty supplies to J.C. Penney if it doesn't cede to its demand to end their relationship by April 2021.

The department store chain's survival has often depended on Sephora's presence. The popular beauty supplies retailer's store-in-stores has generated foot traffic for the retailer that has spilled out into J.C. Penney's other departments, helping to lift sales.

Bankruptcy is now looming for the chain during the pandemic and the loss of Sephora could hasten its demise.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

J. C. Penney Company, Inc. Stock Quote
J. C. Penney Company, Inc.
JCPN.Q
LVMH Moët Hennessy - Louis Vuitton, Société Européenne Stock Quote
LVMH Moët Hennessy - Louis Vuitton, Société Européenne
LVMUY
$129.01 (8.30%) $9.89

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
331%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/05/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.