Legendary American departmental store operator J.C. Penney has been in all kinds of trouble in recent times and recently, the company even filed for bankruptcy. However, J.C. Penney Company Inc (OTCMKTS:JCPNQ) received a major boost this morning after it emerged that e-commerce giant Amazon is in discussions with mall owners Simon Property Group with regards to using closed Sears and J.C. Penney stores are fulfillment centers.
Considering the acute trouble the company is under, it is no surprise that the news has resulted in a strong rally in the stock this morning. The J.C. Penney stock rallied by as much as 20% today and in such a situation, it could be worthwhile for investors to take a closer look at the developments.
According to a report in the Wall Street Journal, Amazon sees as a strategic advantage in turning these stores into fulfillment centers. Since these stores are situated in residential areas, it will help Amazon with last-mile delivery. On the other hand, for the mall owner Simon Property Group, it would allow the company is continuing to earning money from a tenant although it would be a blow to mall traffic. Neither Amazon nor Simon Property was willing to comment on the news.
Amazon has always been focussed on finding ways to make its last-mile delivery more efficient and the J.C. Penny and Sears stores give the Jeff Bezos-owned company the perfect opportunity to move into residential areas.
While it is true that the coronavirus pandemic has proven to be the right time for such an investment, it should be noted that Amazon had been in discussions with Simon Property prior to the onset of the pandemic. In addition to the news about the rally in the J.C. Penney stock, investors should also note that Simon Property Group and Brookfield Property have put in a joint bid to acquire the retail chain operator.