JC Penney sees ‘no way’ to shake off its identity crisis

Bloomberg

For middle-class Americans in the 20th century, JC Penney was one of the first places to look when you needed work pants, toys or towels, chairs or china. Even if you didn’t live anywhere near one of its stores, the iconic mail-order catalog made its goods available to anyone. As Penney’s longtime slogan promised, “It’s All Inside.”
But as mall development spread in the 1970s, customers gained access to wider selections and new fashions. The internet would eventually offer even more. Like its “everything store” rival Sears, JC Penney couldn’t figure out how to stay relevant in this new era.
JC Penney filed for bankruptcy, citing debt of about $8 billion — a burden that finally became too much to bear.
The company’s bankruptcy filing in Corpus Christi, Texas, included $900 million of financing to fund the company through restructuring, including $450 million of fresh capital.
As the old saw goes, the end for the 118-year-old chain came gradually and then suddenly. A parade of chief executives tried different game plans in recent years, changing logos, pricing strategies, store layouts and the merchandise itself. Decisions were made and then undone. Nothing worked. In the end, the department store was finally done in by a force no retailer could have foreseen — a global pandemic that led to a near-total shutdown of the retail sector.
“The American retail industry has experienced a profoundly different new reality, requiring JC Penney to make difficult decisions in running our business,” CEO Jill Soltau said. “The closure of our stores due to the pandemic necessitated a more fulsome review to include the elimination of outstanding debt.” Department stores face a collective crisis as an unprecedented economic shutdown due to the Covid-19 outbreak exacerbates many of the industry’s deep-rooted problems. In March, JC Penney temporarily shut down its 850 stores and put most of its 95,000 workers on furlough. The company soon began missing debt payments.
Some of America’s oldest retailers are in a similar position. Neiman Marcus Group, which also owns Bergdorf Goodman, and Stage Stores Inc have filed for bankruptcy. Nordstrom Inc is permanently closing more than 10% of its full-line stores. Macy’s Inc has written down the value of its business and delayed its quarterly financial report for months. Department stores shed $3 billion in sales in April from a year ago, according to Forrester Research. The situation will likely worsen, with more than half of mall-based department stores forecast to close by 2021, according to Green Street Advisors.
“The mall has lost its appeal,” said Morningstar Investment Service analyst David Swartz. Stores like JC Penney used to be the main attraction and “the problem is the big department stores aren’t draws anymore.”