J.C. Penney deal for shipment of $80 million in Nike goods approved

By Caroline Salls

Pittsburgh, June 25 – J.C. Penney Co., Inc. obtained final court approval to enter a trade agreement and settlement of claims with Nike USA, Inc., according to an order filed Wednesday with the U.S. Bankruptcy Court for the Southern District of Texas.

J.C. Penney said Nike’s products are among its customers’ favorites, and Nike product sales accounted for a substantial percentage of J.C. Penney’s total sales in fiscal year 2019.

To allow J.C. Penney to stock its shelves with ample Nike merchandise, the company said the parties reached an agreement “on terms that will induce Nike to resume shipping to J.C. Penney.”

J.C. Penney said its merchandising plan calls for it to receive another $80 million of goods before the end of the quarter. To meet that projection, the company said nearly a third of those goods need to be shipped immediately, with the rest to be shipped in early July.

As a result, J.C. Penney said it is imperative that the agreement be approved to allow the first $30 million of goods to ship. The company said those goods that have been delayed pending negotiations are “already ‘staged’ for distribution at a moment’s notice.”

In addition, J.C. Penney said if approval for the agreement did not come soon, Nike would release the products it has been holding for the company to competitors.

If this happened, J.C. Penney said it would lose out on tens of millions of dollars in net profits for the current quarter alone.

In addition to the agreement by Nike to ship the $80 million in products to J.C. Penney, the company said the deal calls for it to pay $2 million from a $25 million bucket of critical vendor dollars in order to reduce Nike’s pre-bankruptcy claims dollar-for-dollar, as well as for settlement of all of Nike’s pre-bankruptcy claims at an allowed amount of $19.59 million.

The apparel and home furnishings retailer is based in Plano, Tex. The company filed bankruptcy on May 15 under Chapter 11 case number 20-20182.

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