J.C. Penney files for bankruptcy

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J.C. Penney files for bankruptcy and will shutter stores after struggling with debt amid coronavirus closures!

* J.C. Penney has filed for Chapter 11 bankruptcy, it was announced Friday
* The company has struggled for years with weak sales and competition from online retailers, discounters and specialty
   chains that squeezed its business
* The 118-year-old company said late Friday it will be shuttering some stores - although it has not announced how many
* CEO Jill Soltau said the decision was made 'to protect the safety of our associates and customers and the future of our
   company'
* Penney is the fourth major retailer to go bankrupt amid the pandemic,  after Neiman Marcus, J.Crew and Stage Stores
 * Many experts are skeptical about Penney´s survival even as it sheds its debt

J.C. Penney has filed for Chapter 11 bankruptcy after  the already struggling department store chain was hit hard by the coronavirus pandemic.

As part of its reorganization, the 118-year-old company said late Friday it will be shuttering some stores - although it has not announced how many.

It said the stores will close in phases throughout the Chapter 11 process and details of the first phase will be disclosed in the coming weeks.

Penney is the fourth major retailer to go bankrupt amid the pandemic.

It is the biggest retailer to file for bankruptcy reorganization, and joins luxury department store chain Neiman Marcus, J.Crew and Stage Stores.

Plenty of other retailers are expected to follow as business shutdowns across the country have evaporated sales. In fact, U.S. retail sales tumbled by a record 16.4% from March to April.

'The coronavirus pandemic has created unprecedented challenges for our families, our loved ones, our communities, and our country,' said Penney's CEO Jill Soltau in a statement.

'As a result, the American retail industry has experienced a profoundly different new reality, requiring J.C. Penney to make difficult decisions in running our business to protect the safety of our associates and customers and the future of our company. '

Many experts are skeptical about Penney´s survival even as it sheds its debt and shrinks the number of its stores.

Its fashion and home offerings haven´t stood out for years. And moreover, its middle-to-low income customers have been the hardest hit by massive layoffs during the pandemic.

Many of them will likely shop more at discounters - if they shop at all, analysts say.

'This is a long, sad story,' said Ken Perkins, president of Retail Metrics, a retail research firm. 'Penney offers no reason to shop there compared to its competitors, whether it´s Macy´s or T.J. Maxx or Walmart. How are they going to survive?'

Penney said that it has $500 million in cash on hand and has received commitments of $900 million in financing to help it operate during the restructuring.

It said that it will be looking at different options, including the sale of the company. The restructuring should reduce several billion dollars of its debt and provide more flexibility to navigate the financial fallout from the pandemic, Penney said.

Like many department stores, Penney is struggling to remain relevant in an era when Americans are buying more online or from discounters.

Sears has now been reduced to a couple hundred stores after being bought by hedge fund billionaire and its former chairman Eddie Lampert in bankruptcy in early 2019.

Barneys New York closed its doors earlier this year and Bon-Ton Stores went out of business in 2018.

The pandemic has just put department stores further in peril as they see their sales evaporate with extended closures. Even as retailers like Penney start to reopen in states like Texas and Florida that have relaxed their lock downs, they´re also facing Herculean challenges in making shoppers feel comfortable to be in public spaces.

In fact, Green Street Advisors, a real estate research firm, predicted in a report last month that more than 50% of all mall-based department stores will close by the end of 2021. It expects that Penney will eventually liquidate its business, noting that a smaller company won't solve its main problems.

Like Sears, J.C. Penney´s troubles were years in the making, marking a slow decline from its glory days during the 1960s through 1980s when it became a key shopping destination at malls for families.

The company´s roots began in 1902 when James Cash Penney started a dry good store in Kemmerer, Wyoming. The retailer had focused its stores in downtown areas but expanded into suburban shopping malls as they became more popular starting in the 1960s. With that expansion, Penney added appliances, hair salons and portrait studios.

But since the late 1990s, Penney struggled with weak sales and heavier competition from discounters and specialty chains that were squeezing its business from both ends. Penney´s began flirting with bankruptcy nearly a decade ago when a disastrous reinvention plan spearheaded by then CEO Ron Johnson caused sales to go into free fall.

Johnson drastically cut promotions and brought in hip brands that turned off loyal shoppers. As a result, sales dropped from $17. 3 billion during the fiscal year that ended in early 2012 to $13 billion a year later. Many longtime customers walked away and have not returned. Johnson was fired in April 2013 after just 17 months on the job.

Since then, Penney´s has undergone a series of management changes, each employing different strategies that failed to revive sales. The company based in Plano, Texas, has suffered five straight years of declining sales, which now hover around $11.2 billion. Its shares are trading at less than 20 cents, down from $1.26 a year ago, and from its all-time peak of $81 in 2006.

Soltau has acted swiftly since joining the company in October 2018. She jettisoned from stores major appliances that were weighing down operating profits. That reversed the strategy of her predecessor, Marvin Ellison, who brought appliances to the showroom floor after a 30-year absence in an attempt to capitalize on the troubles of ailing Sears.

Soltau turned the company´s focus back to women´s clothing and goods for the home like towels and bed sheets, which carry higher profit margins. Furniture is still available, but only online.

Still, sales and profits have remained weak. For the fiscal fourth quarter ended Feb. 1, sales at stores opened at least a year dropped 4.7 adjusted for the exit of appliances. Profits were down 64%.

https://www.dailymail.co.uk/news/article-8325231/Pandemic-claims-retailer-J-C-Penney.html

[makeblessed]

So many of the large department stores seem to be filing bankruptcy; feel bad for those that will be out of work as I am sure the big CEO'S will do fine, .  Many of the small business owners, probably will not survive this pandemic.

[countrygirl12]

JC Penny closing has nothing to do with the "pandemic" they have been in trouble for years and closing stores for quite some time.  It has more to do with people order online and crappy clothes that are way over priced.

@makeblessed - you are right about small business owners not surviving this.  There have been a couple in my home town that have closed. Not sure if they would have survived any way but they were forced to close when the state shut down (and they should not have been) and now have a permanently closed sign in front of their building.

[nmbrown863]

Just saw this yesterday. Sad news!

[surveygrabber]

That's is sad. Used to shop there many times. Hope things will work out for them.

[dreamyxo]

Not surprised.  There's a Penny's at the mall near my house. I wonder if they will close. I've gotten some goods deals in their clearance section.  I think one of their problems was they didn't know what they wanted to be.  They weren't high end but some of their prices were ridiculous. Then you had good deals in the clearance section.  If they come out of this I'd like to see them as a discount place like TJMaxx or Ross.  Nothing lasts forever they had a good run.

[UGetPaid]

JC Penney is the only "anchor" store left in our local shopping mall. The Sears, Macy's, and Elder Beerman stores (along with many of the smaller mall tenants) have all closed up over the past five years or so. Sad to see, but a true sign of the times.


But in glass-half-full mode, our local downtown has made somewhat of a comeback over that same span. I hope that it's renaissance survives the covid closures, as many of those downtown stores are small independents.

[sdenimandlace1]

They were a great store to shop at when the kids were little,  they have not had much in the store in years.

[nannycoe1]

They have been around for a long time, I can remember getting some good deals years a go nut their prices have really went up for the last few years

[Nancy5]

They were an anchor store in one of our malls, Macy is the other anchor.  It looks like soon both might be gone. 

[stevensm4]

I saw this on my Yahoo news feed yesterday but in all fairness, its not too surprising. A lot of old stores in this mall I use to frequent have or are closing. The Toys R Us store I walk past looks abandoned and when I went to K-mart before it got torned down, there was barely anyone there and a lot of the shelves were empty.

[Tresbn00]

The surprise, for me, was that they lasted so long. To say that JC Penny was not affected by CoVid does not appear to be true as the stock dropped from fifty cents a share on March eleventh (when the World Health Organization announced that the virus was at pandemic status). The store has not, aggressively, kept up with the times: little to no market diversification or web presence. Uniquely manufactured products are not produced by the store. Relying on being anchors in malls (dying dinosaurs) is a signed death certificate. The stock dropped over eighty percent in the last year: from one dollar and twenty six cents a share to twenty four cents a share becoming a true penny stock (tic). The stock price hit a high of eleven dollars and fifty seven cents in two thousand and sixteen an ha steadily decreased ever since. Without paying dividends there is no interest generated for individual investors, lack of diversification makes the likelihood of a bail out unlikely.

[linderlizzie]

JC Penney is the only "anchor" store left in our local shopping mall. The Sears, Macy's, and Elder Beerman stores (along with many of the smaller mall tenants) have all closed up over the past five years or so. Sad to see, but a true sign of the times.


But in glass-half-full mode, our local downtown has made somewhat of a comeback over that same span. I hope that it's renaissance survives the covid closures, as many of those downtown stores are small independents.

Our local mall is closed down. I'm so sorry to hear about Penney's closing. Just to add insult to injury, our Penney's store has had a large window broken out and boarded up since the mall closing. I wouldn't open the store back up either. What a travesty.

[pectacon]

They were the one big store in our mall where I had half a chance of finding something decent. I'm sad to see them go out, just because it's a shame to last that long and then fold up, but I absolutely see why they are, and they would've even without covid. Same story with Sears.

[debidoo]

When I was a kid and I am now 66 we had a JC Penney in our town  in a vintage building.  It had an old elevator that took you down in the basement where the kids department was and the other two floors had housewares and adult clothing if I remember right.  There was an old man who ran the elevator which had a metal door that closed.  I will never forget my mom taking us there - I don't remember what year it closed but it ended up eventually in a mall in the next town over but to me it was never the same.