JC Penney officially filled for Chapter 11 bankruptcy after being more than $4 billion in debt.

J.C.Penney, which operates more than 800 stores, has been in financial woes for years, the COVID-19 pandemic did not help them.

WHAT WILL HAPPEN TO SEPHORA?

Just last week, Sephora announced it wanted to end their agreement to operate store-in-store boutiques. Soon after, JC Penney quickly filed a temporary restraining order on Sephora.

Sephora believes¬†JC Penney breached their agreement when it furloughed the beauty company’s employees and explored a potential bankruptcy filing without consulting Sephora. Sephora has not furloughed any of its employees during the crisis and notes, “Part of Sephora’s brand value lies in its commitment to its personnel and reputation, according to a news release.

A couple days later, before the bankruptcy, both sides issued a press release stating they resolved their legal issues amicably and “have agreed to mutually beneficial revisions to their joint enterprise operating agreement.” They don’t specify what amendments were made.

Sephora has been losing ground to Ulta Beauty as the top beauty destination for teens, according to the latest survey from Piper Sandler, which found Ulta was the leading spot with 39% share while Sephora trailed in a distant second at 24%.

Sephora has approximately 2,000 stores worldwide, most of which performed well last year.

Ulta has a store within a 10-minute drive of 78% of Sephora’s boutiques inside JCPenney, most of which are stand-alone stores or in strip malls.

No information on which JC Penny stores are closing, 180 t0 200 stores are expected to close.