Posted on 04/08/2020 12:54:46 PM PDT by Diana in Wisconsin
They were once the giants of American retail, strong enough to survive wars, the Great Depression, the Great Recession, and the rise of online shopping. But Sears, JCPenney, and others may not be able to survive the CCP virus crisis.
“The retailers who were wandering around aimlessly pre-pandemic are going to be substantially less likely to muddle through than they were before,” said Mark Cohen, director of retail studies at the Columbia Business School.
During the pandemic, stores have been shuttered. Retailers have furloughed hundreds of thousands of employees and are losing most of their sales. And shoppers have cut back on most purchases other than groceries and daily essentials. Depending on how long consumer demand stalls, companies may be forced to lay off workers, close stores permanently, or restructure.
“Store-based retail was already struggling with internet consumption trends before coronavirus, and now will be faced with accelerated demand shifts to the internet,” Randal Konik, analyst at Jefferies, said in a note to clients last week.
Sears, JCPenney, Neiman Marcus, and J. Crew were some of the most distressed companies prior to the outbreak, according to analysts. Many were forced to close stores in the face of declining sales even as unemployment reached a 50-year low.
Now with a record number of Americans filing for jobless benefits, unemployment is likely to be elevated for months if not years to come, further cutting into Americans’ appetite and ability to shop. Sears filed for bankruptcy in 2018 and its future has been in doubt ever since.
JCPenney, Neiman Marcus, and J. Crew are burdened by crushing debt loads. They’re also at risk from declining market share, too many stores, limited online sales, and a focus on selling discretionary items, analysts say.
JCPenney had $3.7 billion in debt at the end of 2019. Although JCPenney has enough liquidity to survive for the next several months, it may face challenges refinancing its debt in the future, said David Silverman, senior director at Fitch Ratings.
“There’s a good chance they can survive, but this is no layup,” said Craig Johnson, president of Customer Growth Partners. “This is going to be a three-pointer deep in the corner with time running out.” JCPenney will need to drastically reduce its 850 stores, Johnson said.
JCPenney did not respond to requests for comment.
Neiman Marcus is considering filing for bankruptcy to ease its $4.3 billion debt load, Bloomberg reported last month. Neiman Marcus is “completely helpless in light of the fact that the luxury sector may not emerge quickly when the pandemic crisis is over,” said Cohen from Columbia Business School.
Neiman Marcus declined to comment.
J Crew has $1.6 billion in debt. Before the outbreak, J. Crew was planning on spinning off Madewell, its fast-growing denim brand, to help pay down a chunk of its debt. But those plans are now in jeopardy.
“The potential inability for them to IPO Madewell could lead them to a more dire restructuring,” said Silverman from Fitch Ratings.
J. Crew did not respond to requests for comment.
Fitch has also downgraded credit ratings for GNC, Party City, and Tailored Brands, the owner of Men’s Warehouse and Joseph A. Bank, in recent weeks.
The End of Sears?
Last week, Sears announced it would close all of its remaining Sears-branded stores through at least April 30 because of the CCP (Chinese Communist Party) virus outbreak. It is keeping Kmart stores open where allowed. Many of those stores sell groceries and have pharmacies. It also furloughed most of the employees at its corporate headquarters.
But the company has been closing stores—continuously and permanently—for years. Losses of $12 billion since its last profitable year in 2010 made bankruptcy inevitable.
Store closings continued after Sears emerged from bankruptcy, suggesting that the losses at the now privately held company had continued. By the end of February it was down to 182 stores.
A company spokesman declined to comment for this story.
A second, and final, bankruptcy filing would not be unique to Sears. The retail graveyard is filled with companies that emerged from bankruptcy with plans to continue to operate but soon went out of business. Among them are Payless Shoes, Gymboree, American Apparel, and RadioShack.
Now every homo is featured on every commercial, kissing. It’s disgusting. American Family Association used to tell us to call the advertisers about offensive (to us benighted conservatives) PROGRAMS. What do you do when the ADS are offensive?
In Dover, DE there is fantastic Boscov’s Dept. Store. Long may it thrive.
Not really. All things go in fads. People obsess on one approach, then find out it’s not all that and settle down a bit. If we had a bit of everything, that would be ideal situation. Because it DEPENDS on what you want here and now.
As for Macy’s, I’m sick of them buying up everything. They are everywhere. Shouldn’t those vaunted anti-trust rules be coming into play? And Wal-Mart and Target are at best, bottom-level department stores, merely the heirs of K-Mart. I still have a problem calling them “department stores”.
We liked Boscov’s, but it expanded too quickly in MD and now we have to go to the outer towns to get to one.
Sears once had a distribution chain that could deliver to any town in the entire country. Had they put their catalog online early and focused on that, they would be where Amazon is today.
They focused on competing with every other peddler of cheep Chinese crap in a mall and now they’re hosed.
Yes. They were one of the first. They were dead to me after that.
Get woke. Go broke. They saw the error of their ways, but too late, the damage had been done.
I take no joy in people losing their jobs. But if some of those people are the ones who pushed that agenda, well, they reaped what they sowed.
I’ve been to a few Boscov stores, but somehow the one in Dover is special.
Same with LL Bean. Their men’s clothing is overpriced for what it is: flimsy. $50 for a short sleeve sport shirt made in Vietnam. America could produce and market a better quality shirt and sell to the public for less money.
I went to a Petvalue yesterday ,they made me stand by the door in a 4 foot by 4 foot taped off area and I had to tell them what I wanted(we can’t let you in the 2 employees said) I wanted and when they put the food on the counter I pulled out my cash and they said we don’t take cash ,I said thanks and left . Why are they even open ?
I think JC Penny went gay, so no surprise with that one.
Like most large apparel companies, they have had to move production to the cheapest possible places - from Bangladesh to Ethiopia - to cover the staggeringly high major mall rents. Higher quality just sells too slowly.
The MOOCH wore J. Crew and looked HORRIBLE in their clothes!
Sears, Penny’s only 2 around, I’m not attempting a 2 h round trip to stores with no electric carts. I can barely walk now. Nothing I need. That is 1 problem a near 72 yr old woman or man has it all. Common complaint of ou kids, you have what you need, what do we get you. Try a family dinner out. Suggest Steak.
I’m sure poor management decisions, slowness to adapt to changing business models and virtue signaling had nothing to do with their demise.
Yeah...that’s what I thought!
Sears was a partner in Prodigy, which was an early rival to AOL and Amazon. For some reason they sold off their interests in it.
“”Sears and JC Penney are still in business? That’s the bit that’s news to me.””
I was going to say they closed up their stores here in a mall near us about 3-4 years ago. But they may still have stores up the interstate in a different mall. They were in a mall I could get to easily only about 10 minutes away. Very little in that mall remains open but that was LONG before the virus scare!
Yes mall gang violence killed them.
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