$4 billion in debt, JCPenney is expected to file for bankruptcy any time now. They'll be closing as many as 200 stores. This one could have significant impact locally.
QuoteWhile J.C. Penney aims to reorganize and emerge from bankruptcy protection, it plans to permanently shutter roughly 200 stores, a figure that could fluctuate depending on negotiations with creditors, the sources said.
Full article: https://www.reuters.com/article/us-jc-penney-bankruptcy-exclusive/jc-penney-to-file-for-bankruptcy-as-soon-as-next-week-sources-say-idUSKBN22K20F
Interesting to note I haven't seen much discussion about Dillard's. I gather they may be suffering but are in better shape than their peers. I read a Fitch credit review of them and, while risky like all major retailers now, they appear to have adequate liquidity to carry on better than most.
^^^It seems like Belk and Kohl's are within that "better than most" realm as well.
JCPenny was likely months away from filing Chapter 11 prior to all of this happening. JCPenny can trace it's more recent problems to when they hired Rob Johnson from Apple as CEO - terrible hire who did a terrible job. Back in 2011 JCPenny was struggling to attract younger folks into their stores, but they had a nice base of older customers. Johnson's charge was to bring in those younger customers. Johnson then "double failed" - he didn't bring in the younger customers, and his new policies turned off the older ones....so no one was coming in.
Dillard's has been doing OK as a company, and my read is that Belk is doing OK too (not as good as Dillard's). Kohl's is a vey weird one. They are a different animal - their store is sort of a cross between a SteinMart and a traditional department store. Everyone hailed CEO Michelle Gass as a "visionary" when she signed Kohl's up to be a network of Amazon returns centers. However, that really hasn't translate to more sales. It was really the equivalent to buying billboard space for Ski Gear next to a crowded highway in October. Sounds amazing....unless the billboard is in Miami. They recently admitted that it brings in a lot of traffic....but it doesn't lead to many converted sales.
JCPenny isn't the only retailer in trouble. Neiman Marcus filed as well last week, as did J. Crew. J. Crew actually had a good plan for their financial woes, and that was to spin off Madewell via IPO and use the cash to shore up the core J. Crew business. Then COVID-19 came and this became a terrible time to do an IPO.
Long story short...there will be a LOT more of these.
Interesting take on JOhnson at JC Penney. I don't think it's wrong. But it leaves out the problem, JC Penney didn't have a choice but to make that leap across the chasm.
Did those moves scare away some customers? Sure. But JCP's core customer base was already aging and their purchases shrinking. What customers they had they were spending were moving to online options and other brick-and-mortar options.
Johnson's short stint ended nearly a decade ago. JCP's has never recovered because their core issues weren't Johnson.
JCP's never recovered because NOT only because they returned to their dead business model. But also because those lil' things they had to offer, like their Stafford brand, have been gutted, turned into cheap unreliable garbage to squeeze out a few more cents.
The media's had a lot of fun making him out to be a scapegoat. But at least he had the balls to take on a nearly impossible task and risk his reputation. JCP was a cancer patient in bad need of a miracle. At least he gave it a shot.
The real scapegoat is the generation of management preceding him.
If they do end up closing Jax area stores, that would leave Avenues and Orange Park with two department store vacancies and you could pretty much lock the doors on Regency.
I think the core mall model needs to change. If I were a mall operator/developer, I would build multilevel apartments/condos and offices over the mall (Tapestry Park on steroids!). This would provide a walkable community and built in audience for the mall. It would also possibly create more affordable housing due to more efficient use of the real estate. Seems mall designs waste a lot of real estate in most areas. In some places, this approach could apply to large strip and shopping centers too.
Town Center has apartments surrounding it which is an approximation of what I am suggesting overhead. I think multi-use structures that integrate offices/shopping/entertainment/living uses into a single structure or complex should be used a lot more and am surprised we don't see more of it aside from maybe some super-dense urban areas.
Quote from: bl8jaxnative on May 11, 2020, 10:34:04 AM
Interesting take on JOhnson at JC Penney. I don't think it's wrong. But it leaves out the problem, JC Penney didn't have a choice but to make that leap across the chasm.
Did those moves scare away some customers? Sure. But JCP's core customer base was already aging and their purchases shrinking. What customers they had they were spending were moving to online options and other brick-and-mortar options.
Johnson's short stint ended nearly a decade ago. JCP's has never recovered because their core issues weren't Johnson.
JCP's never recovered because NOT only because they returned to their dead business model. But also because those lil' things they had to offer, like their Stafford brand, have been gutted, turned into cheap unreliable garbage to squeeze out a few more cents.
The media's had a lot of fun making him out to be a scapegoat. But at least he had the balls to take on a nearly impossible task and risk his reputation. JCP was a cancer patient in bad need of a miracle. At least he gave it a shot.
The real scapegoat is the generation of management preceding him.
You're not entirely wrong. But, JCPenny did miss the boat entirely on the strong economy over the last 8 years. While there were issues before him certainly, I believe he accelerated those issue with a culture of rapid change. Rapid change isn't bad, but the problem is he didn't have the entire company on board with it. I don't believe it was impossible at all.
The only one that I (wrongly) believed was impossible to turn around was Best Buy. They were Amazon's showroom 10 years ago and I had them left for dead. They completely turned it around.
JCPenny just failed, and yes there were other executives. But the downhill previously was like a "bunny slope". He made the downhill a double black diamond.
Quote from: thelakelander on May 11, 2020, 11:14:20 AM
If they do end up closing Jax area stores, that would leave Avenues and Orange Park with two department store vacancies and you could pretty much lock the doors on Regency.
At this point, maybe that's what they need. I'm not necessarily saying tear it all down, but Regency has been limping along for a
long time, and it seems pretty clear that they need to rethink that entire area. Maybe do something like Roosevelt/Ortega, I don't know. I guess that church is taking the Belk, and I don't know how that whole International Decor Outlet went, but after that do something different.
Quote from: jaxlongtimer on May 11, 2020, 12:07:02 PM
I think the core mall model needs to change. If I were a mall operator/developer, I would build multilevel apartments/condos and offices over the mall (Tapestry Park on steroids!). This would provide a walkable community and built in audience for the mall. It would also possibly create more affordable housing due to more efficient use of the real estate. Seems mall designs waste a lot of real estate in most areas. In some places, this approach could apply to large strip and shopping centers too.
Town Center has apartments surrounding it which is an approximation of what I am suggesting overhead. I think multi-use structures that integrate offices/shopping/entertainment/living uses into a single structure or complex should be used a lot more and am surprised we don't see more of it aside from maybe some super-dense urban areas.
I think you're forgetting why the mall evolved like this in the first place. Almost all mall developers (hell, almost all developers) went in thinking, "how can I make the most money by spending the least money?" They accomplished this by buying the cheapest land they could and building a big box on it. Having to make those big boxes capable of holding apartments on top is a big ask, and depending on the cost might not be worth it to them. You don't need to use the real estate more efficiently if it was cheap in the first place. The main reason the designs you describe are usually in urban areas is because by the time the developer comes in it's already too expensive to do it any other way.
A walkable community wasn't a factor to the developers or the shoppers, and we can still see that in developments like Durbin Park where it's still the same idea. Big box on cheap land. Social asks like affordable housing isn't something developers want to do either. You have to give the core mall model a reason to change. Making commercial developments like shopping malls accomplish social goals like affordable housing and walkability require either incentives to do so or penalties for not doing so.
In the case of something like Regency, you don't even really need to do all of that anyway, just fill in the parking lot. Looking at it on a map, there is an
enormous amount of parking surrounding the mall, and they've even done what I'm saying to a very limited extent, between a fair and some athletic courts. They just need to keep going. Turn those courts into a more fleshed-out athletic complex. Sell off most of the other parking blocks to real estate developers. Maybe build a garage on one of them if they
really have to. That's being done in a lot of places with these malls.
Quote from: Steve on May 11, 2020, 12:34:07 PM
The only one that I (wrongly) believed was impossible to turn around was Best Buy. They were Amazon's showroom 10 years ago and I had them left for dead. They completely turned it around.
Why do you think that turnaround happened? I was certain Best Buy was doomed too.
Asking purely out of curiosity and because I'm enjoying your observations on retail.
Quote from: Wacca Pilatka on May 11, 2020, 12:47:51 PM
Quote from: Steve on May 11, 2020, 12:34:07 PM
The only one that I (wrongly) believed was impossible to turn around was Best Buy. They were Amazon's showroom 10 years ago and I had them left for dead. They completely turned it around.
Why do you think that turnaround happened? I was certain Best Buy was doomed too.
Asking purely out of curiosity and because I'm enjoying your observations on retail.
It's actually part of my day job to keep up with the retail world. To me Best Buy did two major things:
- Match online prices: This to me was #1; I didn't think they could do it (as margins on the "big box" items aren't amazing to begin with). It wasn't a secret that many people walked into Best Buy, found the item online, then bought it online. They made the decision to match online prices. The key here was they were able to get their costs lower so they could afford to do that. This was a key thing Circuit City was NOT able to do. CC matched the prices, but really couldn't afford to do it because of what they were paying.
- BOPUS (Buy online pick up in store): This is key because someone could shop online and get their item in hours vs. Days. They also did a better job training their associates on their items, in order to differentiate themselves from Amazon.
There were numerous other ancillary benefits, like partnering with people you wouldn't think they'd partner with (Amazon for their Fire TVs, Apple for device repair), and they nailed their website redesign (something easier said than done).
But to me it really comes down to this: Make sure your brand is clear and reliable. Examples:
- Make sure the public knows what they can and cannot get from you: This is certainly easier in electronics than in what JCPenny does. If someone wants an iPhone and you have it at the market price that's half the battle. If someone wants bedsheets in beige, that may be a battle as you might not have the right softness, exact beige, etc.
- Make online and BOPUS work: BOPUS is a giant advantage for retailers with a good physical presence - it's built-in warehouses across the country. Whether fulfilling a BOPUS transaction or ship to home, make sure the customer knows when they will receive their item, then (shocker), MAKE SURE YOU ACTUALLY HIT THE DATE! Personally, I'm not all about this whole "next day everything" for retailers - it doesn't make sense. Does someone always NEED their item tomorrow - especially Christmas gifts? Likely not. As a retailer (particularly small to midsized ones), usually 3 days is fine....as long as you are black and white with your consumer, making sure you tell them them when a product will arrive then actually be successful at it.
JCPenny is in a MUCH worse hole now because yea Johnson tried....but he also burned through many Dubloons doing it. Now, there aren't many Dubloons left to invest in yourself.
Quote from: marcuscnelson on May 11, 2020, 12:44:07 PM
Quote from: thelakelander on May 11, 2020, 11:14:20 AM
If they do end up closing Jax area stores, that would leave Avenues and Orange Park with two department store vacancies and you could pretty much lock the doors on Regency.
At this point, maybe that's what they need. I'm not necessarily saying tear it all down, but Regency has been limping along for a long time, and it seems pretty clear that they need to rethink that entire area. Maybe do something like Roosevelt/Ortega, I don't know. I guess that church is taking the Belk, and I don't know how that whole International Decor Outlet went, but after that do something different.
Quote from: jaxlongtimer on May 11, 2020, 12:07:02 PM
I think the core mall model needs to change. If I were a mall operator/developer, I would build multilevel apartments/condos and offices over the mall (Tapestry Park on steroids!). This would provide a walkable community and built in audience for the mall. It would also possibly create more affordable housing due to more efficient use of the real estate. Seems mall designs waste a lot of real estate in most areas. In some places, this approach could apply to large strip and shopping centers too.
Town Center has apartments surrounding it which is an approximation of what I am suggesting overhead. I think multi-use structures that integrate offices/shopping/entertainment/living uses into a single structure or complex should be used a lot more and am surprised we don't see more of it aside from maybe some super-dense urban areas.
I think you're forgetting why the mall evolved like this in the first place. Almost all mall developers (hell, almost all developers) went in thinking, "how can I make the most money by spending the least money?" They accomplished this by buying the cheapest land they could and building a big box on it. Having to make those big boxes capable of holding apartments on top is a big ask, and depending on the cost might not be worth it to them. You don't need to use the real estate more efficiently if it was cheap in the first place. The main reason the designs you describe are usually in urban areas is because by the time the developer comes in it's already too expensive to do it any other way.
A walkable community wasn't a factor to the developers or the shoppers, and we can still see that in developments like Durbin Park where it's still the same idea. Big box on cheap land. Social asks like affordable housing isn't something developers want to do either. You have to give the core mall model a reason to change. Making commercial developments like shopping malls accomplish social goals like affordable housing and walkability require either incentives to do so or penalties for not doing so.
In the case of something like Regency, you don't even really need to do all of that anyway, just fill in the parking lot. Looking at it on a map, there is an enormous amount of parking surrounding the mall, and they've even done what I'm saying to a very limited extent, between a fair and some athletic courts. They just need to keep going. Turn those courts into a more fleshed-out athletic complex. Sell off most of the other parking blocks to real estate developers. Maybe build a garage on one of them if they really have to. That's being done in a lot of places with these malls.
I am saying the "reason to change" is that the traditional mall model is now failing so it calls for something new. The "incentive to do so" is building in a substantial shopping base of customers living on or about the property. The housing may or may not be "affordable" but it should be more affordable than building detached homes. Many of the malls that decades ago were built on "cheap" land are now surrounded by much development so that land now has much greater value potentially supporting more density.
If cities could make such developments transit hubs that would help seal the deal even more.
While I agree with this (Malls need to evolve), there's also another dynamic: We have WAY more retail Square Footage per person than any other developed country at between 23 and 24 SqFt Per Person. Canada is next with about 17, and no other country is above 15.
Now, some of that has to do with the American consumer - we like big things (big cars, big houses, big yards, etc.) but it still doesn't add up.
As mentioned, we see this happening in Jacksonville with Regency, and the other malls and large shopping centers. Lifestyle centers are the big thing as you don't have to air condition all of these corridors.
I do think Residential is part of the equation (look at Roosevelt Square evolving into Ortega Park), or better yet: the example of nearly every downtown in America except for Jacksonville.
Thanks, Steve, for taking the time to explain all of these trends and the Best Buy situation in detail.
Quote from: jaxlongtimer on May 11, 2020, 02:36:38 PM
I am saying the "reason to change" is that the traditional mall model is now failing so it calls for something new.
New, yes. Radically different, probably not. At the end of the day, the lifestyle centers that Steve mentions are a departure from traditional malls, but not substantially different. Thats why something like Ortega Park or San Marco East Plaza can be a matter of tearing the roof off and filling in the parking lot.
Quote
The "incentive to do so" is building in a substantial shopping base of customers living on or about the property. The housing may or may not be "affordable" but it should be more affordable than building detached homes. Many of the malls that decades ago were built on "cheap" land are now surrounded by much development so that land now has much greater value potentially supporting more density.
Not necessarily. Mall developers don't necessarily want to be in the business of building that shopping base themselves versus either locating somewhere with a bunch of houses or letting the houses come to them. In St. Johns County, it might actually be cheaper to build single family homes than multifamily because there are just so many damn incentives to build single family, on top of the county handling so much of the infrastructure. Looking around Regency on a map, are there apartments? Yes. But there are also a ton of detached houses. Of course, that's more the fault of the government than of the developers themselves, but it's still a key factor.
Quote
If cities could make such developments transit hubs that would help seal the deal even more.
Definitely a good point, I totally agree. At the end of the day, I think we're both in agreement that Regency needs to change, and that density is the answer for that change. In the long term, what you're saying looks like it will be the trend of dense urban development, while what I'm saying is more the solution for places like Regency where there's room for infill.
Regency is also facing the issue of the disposable income around the mall. It isn't good compared to The Avenues or St John's Town Center. Combined that with the fact that Aeropostale or Old Navy or whoever just doesn't need 4-5 stores in the Jacksonville market and you see who's on the copping block.
In a lot of ways River City Marketplace has picked up SOME of that, as it provides a shopping opportunity for folks on the northside and north of town, versus driving all the way to St John's Town Center. It's also hurt regency a bit too.
I think the residential in the immediate vicinity (or above the store) certainly helps, but large regional centers need more than that. For example, residential came online at Town Center a while after the place was open and a success. Now, some of that is related to the fact that retail in 2005 was much different than today. But, along Town Center Parkway, how many apartments or condos are there really? A couple thousand? You need a lot more than that to sustain the stores at Town Center.
Now, related to density and cost to develop: Notice there ae (comparatively) very few parking garages at Town Center. A parking garage is about 20k a space. Especially in 2005, land was comparatively cheap around there. If you go up with residential, you'll likely need to go up with parking. There isn't enough incentive to cram it all in densely.
This is a longer conversation, but I think we could see a time where (believe it or not), the inside of parking at Town Center becomes timed parking.
(insert audible gasp).
Seriously. When it comes to Buy Online Pickup In Store (BOPIS/BOPUS depending on who you ask), people don't need to be there for long.
Quote from: Steve on May 11, 2020, 03:57:07 PM
This is a longer conversation, but I think we could see a time where (believe it or not), the inside of parking at Town Center becomes timed parking.
(insert audible gasp)
Your nightmare has arrived already. Town Center has had, for some time now, privately run metered parking spaces in select spots such as the space around the end with Capital Grill and Nordstroms.
Quote from: jaxlongtimer on May 11, 2020, 06:40:11 PM
Quote from: Steve on May 11, 2020, 03:57:07 PM
This is a longer conversation, but I think we could see a time where (believe it or not), the inside of parking at Town Center becomes timed parking.
(insert audible gasp)
Your nightmare has arrived already. Town Center has had, for some time now, privately run metered parking spaces in select spots such as the space around the end with Capital Grill and Nordstroms.
Yea, I've seen that. It's (as a percentage) a pretty small number of spots.
And to be clear-I think it would be a good idea. Personally I never park in the center strip. It's just easier to park further away and walk versus circling 5 times.
[quote author=Steve link=topic=36214.msg502108#msg502108 date=1589219208
JCPenny is in a MUCH worse hole now because yea Johnson tried....but he also burned through many Dubloons doing it. Now, there aren't many Dubloons left to invest in yourself.
[/quote]
I don't disagree with the spending. I think where we differ is how much to attribute it to Johnson. Well that me not doing this much. So I appreciate the feedback.
I don't the JCP had a choice; it was do or die. That was known then. The investors that bought up JCP could see their performance was crap & worth the gamble.
And while they burned through some cash, johnson's share reign didn't rack up debt. That happened after when JCP returned to their failed biz model.
Maybe this is what sticks in my craw. JCP returns to a model that wasn't working at a time when everyone is changing how they do retail. They get a couple stories - ones I consider bullshit - trumpeting a revival at a me when their sales / sq foot was dangerously fallling. Great example, IMHO, of the power of PR and how desperate the press is for a story that sells.
I don't mean to cherry pick nor this be anything complete. but here's a few bits from JCP 10Ks. What's really tellling that I don't include is that free cash flow goes to shit in 2013. WHY? That's not Johnson's doing and they rack up a lot of debt because of it.
At the core Johnson wasn't around long enough to do damage. The damage was returning to a business model that no one that would work in the long run. Now maybe that's a responsible thing to do for investors. Maybe their job isn't to keep the thing alive, but to ensure some returns. After all it ain't easy to turn anything around.
------------------
don't mean this bit to be cherry picking. just trying to quickly share some of the basic metrics in play.
------
2009
Since our founding by James Cash Penney in 1902, we have grown to be a major retailer, operating 1,108 JCPenney department stores in 49 states and Puerto Rico as of January 30, 2010.
Long-term debt, including current maturities
2009 - 3,392 2008-3,505 2007-3,708 2006-3,444 2005 -3,465
2012
operating 1,104 department stores in 49 states and Puerto Rico as of February 2, 2013.
s of March 5, 2013, approximately $2.868 billion of long-term debt was outstanding under the Company's indentures.
Long-term debt, including capital leases, note payable and current maturities
2012- 2,982 2011-3,102 2010-3,099 2009-3,392
2015
Sales per net selling square foot(2)
2015 -$165
2014-$ 155
2013 $147
2012 -$161
2011 - $212
2020
Since our founding by James Cash Penney in 1902, we have grown to be a major retailer, operating 846 department stores in 49 states and Puerto Rico as of February 1, 2020.
Total debt (6)
2019-3,721 2018-3,808 2017-4,012 2016-4,602 2015-4,769
Total net sales
2019- $10,716 2018 $-11,664 2017-$12,554 2016-$12,571 2015-$12,625
BTW - I haven't checked into Best Buy much. I suspect there a lot of their turnaround story is genuine. But keep in mind that some of it is "not dead yet". Now that's a bit of an accomplishment on it's own. But their sales, IIRC, haven't' grown in the last decade.
One flag for me is that they've taken on a ton of debt the last few years. IIRC they've got $3B or maybe even more than $4B? It's up there.
I'm not sure what they've done with the debt. Building out logistics? Stock buy backs? Either way a few years ago they would've been golden to ride out a retail apocalypse. $4B in debt may be manageable with $40B in revenue. But with $30B? $19B?
Another thing that helped Best Buy is they outlasted all their brick and mortal competition. They are all that's left. (Besides Fry's and Microcenter and the like which aren't direct competition and aren't in most markets)
Quote from: bl8jaxnative on May 12, 2020, 09:07:13 AM
BTW - I haven't checked into Best Buy much. I suspect there a lot of their turnaround story is genuine. But keep in mind that some of it is "not dead yet". Now that's a bit of an accomplishment on it's own. But their sales, IIRC, haven't' grown in the last decade.
FY15: $39.5B
FY16: $39.4B
FY17: $42.1B
FY18: $42.8B
FY19: $43.6B
For a retail company well into 11 figures, that's actually nice top line growth. Profit is good story too:
FY15: $9.1B
FY16: $9.4B
FY17: $9.8B
FY18: $9.9B
FY19: $10.0B
EPS has steadily risen as well so the total number of shares outstanding I'm guessing is somewhat flat. I couldn't quickly find that number.
Quote from: bl8jaxnative on May 12, 2020, 09:07:13 AM
One flag for me is that they've taken on a ton of debt the last few years. IIRC they've got $3B or maybe even more than $4B? It's up there.
I'm not sure what they've done with the debt. Building out logistics? Stock buy backs? Either way a few years ago they would've been golden to ride out a retail apocalypse. $4B in debt may be manageable with $40B in revenue. But with $30B? $19B?
Short Term Debt has been $0 back to FY15. Total Debt has actually dropped from $1.7B in FY15 to $1.27 in FY19. Their Total Liabilities did rise from $9.6B to $12.1B over the last Fiscal Year. Now, Liabilities is different then Debt on the balance sheet (though I'm not a finance guy and I don't remember all of the differences between the two, and maybe they're hiding some bad financial data somewhere.
Source on all of this is Reuters:
https://www.reuters.com/companies/BBY/financials/balance-sheet-annual
Recently it appears CEO Corie Barry agreed to take on some more liabilities. Why? I don't remember and I'd have to dig their annual report back up to see if I could figure it out. Their total Liabilities was relatively flat until last year. Now, could that be a bad decision? Maybe, time will tell.
The point is, they completed the turnaround and they proved they could compete against Amazon in their space and more than hold their own. That alone was something I never thought they could do, mostly because I doubted their ability to lower COGS.
Quote from: Lostwave on May 12, 2020, 10:02:59 AM
Another thing that helped Best Buy is they outlasted all their brick and mortal competition. They are all that's left. (Besides Fry's and Microcenter and the like which aren't direct competition and aren't in most markets)
It absolutely helped, no doubt. Circuit City and Sound Advice were gone prior to their turnaround.
This is probably a really dumb question, but if Best Buy is making $9-10 billion in profit every year for 5 years running, why don't they just use some of that profit to pay off their debt? Or is this like the national debt where it doesn't matter that much?
Quote from: marcuscnelson on May 13, 2020, 12:53:34 PM
This is probably a really dumb question, but if Best Buy is making $9-10 billion in profit every year for 5 years running, why don't they just use some of that profit to pay off their debt? Or is this like the national debt where it doesn't matter that much?
The Debt definitely does matter - just ask any retailer that's filed Chapter 11 or liquidated. Similar to consumer debt, the mere presence of debt isn't by itself bad but mismanagement or taking on too much can get you in trouble.
I can't speak for the exactly what Best Buy's debt represents, but retailers take on debt for a number of very common operating reasons. One reason is the fact that their sales aren't proportional across all 12 months, and they have to make purchases of goods in January for purchases throughout the year including during the busy November-December times. It's very common for November and December to be 2/3 of a retailer's annual or more - I spent almost 12 years at an EXTREMELY seasonal online retailer. Since you don't have the cash to make that purchase yet, retailers will often make those purchases on credit. Obviously in January there are the sales that just came in during Q4, but retailers do have to spend money on things that aren't people or goods to sell.
The ideal is that at the end of the holiday season the retailer can pay off their debt then start fresh for the next year. That could be what Best Buy is doing, but without diving into detail I have no idea.
Today may be the day 200 of its 846 stores are expected to be closed:
https://www.dailymail.co.uk/news/article-8322275/JC-Penney-plans-file-bankruptcy-today.html
I see they've decided to reopen the Avenues store but not Orange Park and Regency this week:
https://www.jaxdailyrecord.com/article/j-c-penney-to-reopen-at-the-avenues-on-may-13
I wonder is that a sign to come?
Quote from: thelakelander on May 15, 2020, 09:13:36 AM
Today may be the day 200 of its 846 stores are expected to be closed:
https://www.dailymail.co.uk/news/article-8322275/JC-Penney-plans-file-bankruptcy-today.html
I see they've decided to reopen the Avenues store but not Orange Park and Regency this week:
https://www.jaxdailyrecord.com/article/j-c-penney-to-reopen-at-the-avenues-on-may-13
I wonder is that a sign to come?
It would be hard to see them leaving JAX completely, and Regency is a no-brainer to close.
JCPenney has filed for bankruptcy and will close some stores. Don't know if any of the three Jacksonville area locations will be affected. The one at Regency Square, the one at the Avenues, and the one at the Orange Park Mall.
Oddsmakers don't seem to be giving Penney's much of a chance unfortunately. Penney's is already highly leveraged, has an outdated. stale and very weak brand image and has no remaining resources to realistically catch back up to Walmart, Target, Amazon, Costco, etc.
It's another example of a great American company (118 years old) being run into the ground by greedy private equity firms. In the case of retailers, they have leveraged these firms to the hilt on the backs of the retailers' real estate holdings and favorable leases leaving no margin for error in operations. Hit a deep recession, an epidemic or just the need to reinvest capital into updating the business model vs. leveraging the firms to enable paying out fat dividends, fees and stock buybacks and you get what you are seeing nowadays. Neiman Marcus, J Crew, Sears-kmart, Penneys, etc. & more to come.
The #1 thing you see most of the great tech companies doing is accumulating massive capital (tens to hundreds of billions in hard cash reserves) vs. significant payouts to shareholders in relation to their profits and accumulated equity. Its what is enabling them to stay cutting edge year after year and expand into new ventures. And, not one of them is mentioned in the same breath as bankruptcy. More businesses should move in this direction and this epidemic may force their hands - if they survive long enough to do so.
Which private equity firm has ran JC Penney into the ground?
I'm not convinced they're done for. At a minimum, I give them better odds than Sears (though that's a VERY low bar). While the turnaround was FAR from complete, there were some positives coming out of there before COVID-19. Was it enough to start righting the ship? We'll never know.
Looks like they're able to leverage their real estate for $900M in cash. They'll then use this to pay off debt and keep some stores open. This isn't a panacea, but could buy them some time to let their plan take effect. They likely have one more major shot.
Quote from: bl8jaxnative on May 18, 2020, 02:45:56 PM
Which private equity firm has ran JC Penney into the ground?
Point noted and clarification called for.
JCPenney's management was controlled by a hedge fund at one point but the company was already highly leveraged, following the the private equity model. Thus, while remaining a publicly held company, it differed from most of its private equity competitors in form, but not in substance. Here is a good overview of the role of private equity in the retail sector, comparing JCPenney to others taken private: https://prospect.org/coronavirus/unsanitized-jcpenney-follows-private-equity-sinks-into-bankruptcy/ (https://prospect.org/coronavirus/unsanitized-jcpenney-follows-private-equity-sinks-into-bankruptcy/)
Quote... you can't cherry-pick one company and absolve the failed PE business model. According to the Wall Street Journal, 27 of the 38 retailers with the "weakest credit profiles" are private equity-owned. The incredible debt burden placed on these firms made them inflexible amid industry changes. And that was JCPenney's problem too; its downfall mirrored the tell-tale signs of a private equity portfolio company....
Here's an interesting scenario:
https://wwd.com/business-news/retail/amazon-j-c-penney-1203635977/
I noticed that this thread's original poster's post is gone...Florida Power and Light's posts can be a little challenging to follow, but he/she has a voice and is using it to the best of their ability.
Quote from: sandyshoes on May 19, 2020, 09:20:35 AM
I noticed that this thread's original poster's post is gone...Florida Power and Light's posts can be a little challenging to follow, but he/she has a voice and is using it to the best of their ability.
There were two threads - merged into one.
They just made a list of store closings this summer. The JCPenney's at Regency Square Mall will close. The ones at the Avenues and Orange Park Mall will remain.
The nail in the coffin was already in place for Regency but you can now toss the dirt on it.
Maybe they can put bunk beds all through Regency Mall to house the people coming to Lenny's RNC.