05-15-2020, 08:48 PM
J C PENNEY
The venerable J C Penney corporation, once the first place to which many of us went to get clothes, has declared Chapter 11 bankruptcy.
New York (CNN Business)JCPenney filed for bankruptcy on Friday, the latest retail giant to see its downfall hastened by the coronavirus crisis. The pandemic was the final blow to a 118-year-old company struggling to overcome a decade of bad decisions, executive instability and damaging market trends.
The company said it has an agreement with most of its lenders on the turnaround plan that will allow it to stay in business as a more financially healthy company, but will include closing an as yet unannounced number of its 846 stores. As part of the turnaround process JCPenney arranged to borrow an additional $450 million from those lenders to pay for operations during the reorganization.
The company blamed the Covid-19 pandemic for the need to file bankruptcy.
"Until this pandemic struck, we had made significant progress rebuilding our company under our Plan for Renewal strategy -- and our efforts had already begun to pay off," said CEO Jill Soltau. "Implementing this financial restructuring plan through a court-supervised process is the best path to ensure that JCPenney will build on its over 100-year history to serve our customers for decades to come."
How the mighty have fallen
JCPenney's history began in 1902 with its first store in Kemmerer, Wyoming. It grew to become one of the major national retailers, an anchor of many suburban shopping malls along with rivals like Sears and Macy's, (M) which find themselves facing their own struggles today. JCPenney reached its peak number of stores in 1973, when it operated just over 2,000 locations nationwide.
Today, JCPenney has 85,000 employees, making the company among the largest US retailers to file for bankruptcy in recent years. It has more US stores than other troubled companies such as Sears, Toys "R" Us or Sports Authority did when they filed.
JCPenney has been struggling under a mountain of debt and red ink for a decade. But the last 10 years have been filled with one mistake after another, as a revolving door in executive leadership brought it four different CEOs. Radical changes meant to revive the company — including ending coupons and clearance sales in an attempt to capture more upscale shoppers, and introducing household appliances — proved to be spectacular failures that were quickly undone.
But the company was also struggling with the decline in the entire department store sector. More consumers are shopping online rather than in person, and JCPenney was also battered by the growth of big box discounters such as Walmart (WMT), Target (TGT) and Costco (COST), which provide shoppers with lower prices and a selection of items not found in department stores, such as groceries.
JCPenney's most recent profitable year was 2010, and its net losses have totaled $4.5 billion since then.
Since the summer of 2011 it has reported net profits in only five quarters, all of them in the holiday shopping season -- it has been unable to make money without that boost in sales. Since the start of 2011, JCPenney has closed more than 20% of its stores while cutting more than 40% of its staff.
Despite the history of mistakes and industry trends moving against it, there had been recent signs of hope at JCPenney before this crisis.
In November, as the holiday shopping season was just about to start, its losses shrank in the third quarter, and it raised its profit forecast, even as its sales continued to fall.
"We made significant progress on our efforts to return JCPenney to sustainable, profitable growth," Soltau said in a statement at that time.
But that optimism proved short-lived, as net income plunged 64% in its fourth quarter, which included the holiday shopping season, and the company announced another round of store closings.
https://www.cnn.com/2020/05/15/business/...index.html
The venerable J C Penney corporation, once the first place to which many of us went to get clothes, has declared Chapter 11 bankruptcy.
New York (CNN Business)JCPenney filed for bankruptcy on Friday, the latest retail giant to see its downfall hastened by the coronavirus crisis. The pandemic was the final blow to a 118-year-old company struggling to overcome a decade of bad decisions, executive instability and damaging market trends.
The company said it has an agreement with most of its lenders on the turnaround plan that will allow it to stay in business as a more financially healthy company, but will include closing an as yet unannounced number of its 846 stores. As part of the turnaround process JCPenney arranged to borrow an additional $450 million from those lenders to pay for operations during the reorganization.
The company blamed the Covid-19 pandemic for the need to file bankruptcy.
"Until this pandemic struck, we had made significant progress rebuilding our company under our Plan for Renewal strategy -- and our efforts had already begun to pay off," said CEO Jill Soltau. "Implementing this financial restructuring plan through a court-supervised process is the best path to ensure that JCPenney will build on its over 100-year history to serve our customers for decades to come."
How the mighty have fallen
JCPenney's history began in 1902 with its first store in Kemmerer, Wyoming. It grew to become one of the major national retailers, an anchor of many suburban shopping malls along with rivals like Sears and Macy's, (M) which find themselves facing their own struggles today. JCPenney reached its peak number of stores in 1973, when it operated just over 2,000 locations nationwide.
Today, JCPenney has 85,000 employees, making the company among the largest US retailers to file for bankruptcy in recent years. It has more US stores than other troubled companies such as Sears, Toys "R" Us or Sports Authority did when they filed.
JCPenney has been struggling under a mountain of debt and red ink for a decade. But the last 10 years have been filled with one mistake after another, as a revolving door in executive leadership brought it four different CEOs. Radical changes meant to revive the company — including ending coupons and clearance sales in an attempt to capture more upscale shoppers, and introducing household appliances — proved to be spectacular failures that were quickly undone.
But the company was also struggling with the decline in the entire department store sector. More consumers are shopping online rather than in person, and JCPenney was also battered by the growth of big box discounters such as Walmart (WMT), Target (TGT) and Costco (COST), which provide shoppers with lower prices and a selection of items not found in department stores, such as groceries.
JCPenney's most recent profitable year was 2010, and its net losses have totaled $4.5 billion since then.
Since the summer of 2011 it has reported net profits in only five quarters, all of them in the holiday shopping season -- it has been unable to make money without that boost in sales. Since the start of 2011, JCPenney has closed more than 20% of its stores while cutting more than 40% of its staff.
Despite the history of mistakes and industry trends moving against it, there had been recent signs of hope at JCPenney before this crisis.
In November, as the holiday shopping season was just about to start, its losses shrank in the third quarter, and it raised its profit forecast, even as its sales continued to fall.
"We made significant progress on our efforts to return JCPenney to sustainable, profitable growth," Soltau said in a statement at that time.
But that optimism proved short-lived, as net income plunged 64% in its fourth quarter, which included the holiday shopping season, and the company announced another round of store closings.
https://www.cnn.com/2020/05/15/business/...index.html
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