JCPenney's (NYSE:JCP) huge store-remodeling project has left an even bigger construction mess than the retailer thought. Two contractors say they're owed $6.3 million for work they did last year on the renovations, and the unveiling of some store upgrades has been delayed until June 6, according to Bloomberg.
A Tennessee contractor, EMJ Corp., has filed liens totaling $2.3 million and filed lawsuits on April 4 against the chain in three states for work completed last September. Arkansas contractor R&R Packaging also filed a lawsuit on April 4—days before ex-CEO Ron Johnson was fired—claiming JCPenney owes it $4 million for installing wireless Internet networks in stores across the country. The retailer filed a $2 million counterclaim, saying R&R failed to finish the work on time.
According to one of the EMJ lawsuits, renovations for the Izod (NYSE:PVH) and Liz Claiborne (NYSE: FNP) "shops within the store" cost about $92,000 per store. That would scale up to $63 million for work on just those two brands at the 680 stores being renovated. Johnson's original plan was to have as many as 100 brand-based shops in each store, which would have put a multibillion-dollar price tag on the project.
The chain also has yet to complete redesigned home sections for 500 stores, which were originally scheduled to start opening next month. Delays were reportedly due in part to a steady stream of changed decisions combined with unreasonably short schedules and poor coordination.
The executives previously responsible for the project are now gone—last week JCPenney confirmed that its top construction execs have left the company—but the chain and new CEO Mike Ullman are still left with a huge bill and legal messes to clean up. Whatever else Johnson may not have been good at, they'd better hope he knew what he was doing when it came to store design.
- See this Bloomberg story
JCPenney Looks Into Its Big Remodeling Project: Did Execs Bend Legal Requirements?
JCPenney's CEO Cleans House, But How Far Can He Go?
JCPenney's Johnson Out, Ullman Back—What Now?