J.C. Penney Company, Inc. (JCP) Facing Legal Battle

Unfortunately for J.C. Penney Company, Inc. (NYSE:JCP), it appears that its rough patch is continuing. As we discussed a couple weeks back, the company seems to have lost touch with its consumers. Now, Penney finds itself locked in a legal battle with an upscale coffee-press maker.

According to a report by Reuters, Bodum Group has sued J.C. Penney Company, Inc. (NYSE:JCP) for breach of contract. As you can imagine, this is not the type of bad publicity the company needs right now. With so much else going on, throwing this into the fire could make things even more uneasy in the upcoming months.

Why is J.C. Penney Company, Inc. (NYSE:JCP) in Trouble?

You would think that Penney and Bodum would be able to work things out, however, this doesn’t appear to be the case.

The two companies reached a deal late last year for the retailer to feature Bodum products in a modern shop within its stores. Penney abandoned this idea, and now it appears that the company is going to pay for it.

The lawsuit was filed in the New York State Supreme Court in August, stating that Penney missed the launch date of March 2013.

While the two companies continue to fight things out, J.C. Penney Company, Inc. (NYSE:JCP) is looking for a way to get back on stable ground. After a 25 percent sales decline last year, any uptick in activity would be better than none at all.

Bodum has made it clear that it spent nearly $3 million preparing for the launch that never happened. That being said, the company has yet to calculate the exact damages.

In the complaint, Bodum was quoted as saying: “Now, with JCP’s inept and failed launched of this brand, it will be impossible to successfully relaunch the brand for a significant period of time.”

In J.C. Penney Company, Inc. (NYSE:JCP)’s defense, the company did abandon its “shop in shops” plan for its stores. Of course, this doesn’t give the company the right to overlook the contracts that were already in place.

This is just another setback for the once proud retailer. It will be interesting to see how this lawsuit plays out in the months to come, as Penney continues to fight forward.

These hedge fund managers haven’t given up on Penney just yet: Patrick Mccormack, Larry Robbins, Christian Leone, and Chase Coleman.

Disclosure: none