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Bloomberg
Sephora USA Inc escalated its legal fight with partner JC Penney Co, saying the department-store chain’s response to the pandemic violates an agreement allowing it to operate about 650 in-house beauty boutiques.
JC Penney, which closed all its stores in March as the virus spread, persuaded a Texas state court judge last week to temporarily bar Sephora from exiting their 16-year arrangement. Sephora, concerned it would be locked into the contract if the struggling retailer files for bankruptcy, shifted the case to a federal court, where JC Penney’s request for a more lasting order is in play.
“No part of JCP’s fanciful, one-sided narrative was or is true,†Sephora said in federal court filings.
Many retailers are struggling to refinance debt as revenue plunges during the pandemic, hoping to buy time until they can attract shoppers once the restrictions begin to ease.
JC Penney said it sued to prevent being harmed by Sephora’s threat to end their contract at least two years early. The department-store chain is relying on the boutiques, which are staffed by JC Penney workers who sell Sephora products.
Sephora said JC Penney breached its contract by furloughing boutique workers during the shutdowns prompted by Covid-19.
It also claims no harm would come from ending the arrangement early because the in-store boutiques have hundreds of millions of dollars of cosmetics and skin-care products in stock that can be sold over the next three or four months as JC Penney seeks a new partner.