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.
I shop at Duluth for a lot of my clothes now. Sturdy clothes that fit true to size (I can actually wear their medium size shirts!).
Big ones are going to bite the dust. The politicians refuse to realize that businesses don’t have an infinite source of money. They must sell product, or close. Only government appears to have an infinite source of money, because it can issue money that has no backing, and continue doing that forever. It causes runaway inflation, but the government will never admit that.
Sears and JC Penny are still around?
I thought they went away like 5 years ago
Why can’t they just die already
Sears, JCPenney, Neiman Marcus, and J. Crew
Gone
and Macy’s is right behind them.
Our local Sears store started having going out of business sales months ago, as part of company downsizing. I think that overall, Sears has been struggling.
Many sales are made through the internet these days. I got an email from one company that I have ordered from, saying that they have to delay shipping orders because they just aren’t ready for the demand these days. Sounded to me like that company could stand to do a little upsizing.
J.C Penny, started a rapid decline when they tried to capture the .2% gay dad customers and they alienated the rest of their god fearing American customers.
I worked for Sears for 26 years. I'm not sorry to see them go.
Had a Sears in the Burlington County Mall, it was the only store left in the entire mall, the mall was a dead mall and the Sears was left. I remember them having a sign, “Sears is still open!” over the battered mall sign down by the highway. I could never figure out, why? But they kept that store open for a few more years until it was closed a couple years ago. Now the entire mall is vacant and nature has been taking over.
I’ve bought jeans and socks from Duluth when they’re on sale.
i have not spent a penny at Macy’s since they dropped Trump’s line.
Also they go overboard gnashing about the queers. No thanks.
So have I. And I stopped shopping there when MO was buying her clothes there.
If my nephew is ever released from his home prison and allowed to work again in Dover, maybe I’ll have to go shopping there with him and family.
Online sales made these brick and mortar stores less desirable except to those who like to touch or try on their products first.
My hope is the vacant buildings find good tenants in certain businesses that need to be visited in person. Tractor Supply comes to mind for many, if not most, of their key products.
I do feel bad for the employees who find themselves unemployed without other jobs available to slip into.
I was watching reruns of the Sci-Fi series ‘Expanse’. In one scene they talk about a standard 30% unemployment rate. In this apparent utopia all jobs are gotten through the state. Apparently utopia is pure communism to the writer(s). One opening could have 6k applicants. Ironically the people living on Mars are all employed and useful. Life is hard for the space belter’s living between earth and mars who do mining but they manage.
How about Coronavirus ‘R’ Us?
I think they had a bad Business Model from the get go.
Who had a bad bus model from the get-go?
Cuz I think 120 years sounds like a pretty good model.
JCP is the only place that I buy my jeans. Arizona brand.
I recall as a kid Sears being our family’s main store for just about anything, and in my case tools, hardware and appliances.
I cannot get over the fact that just plain poor management brought them to their knees. The biggest mail order house in the world could not transition to the internet.
Then to top it off the total fools sold off their best sellers, the biggy being Craftsman, hoping their dead weight would pull them through. Just mindless.
With stupidity like that, they deserve to go under.
>>>Who had a bad bus model from the get-go?<<<
Uh, “Coronavirus ‘R’ Us” It’s a Joke.
(Remember Toys ‘R’ Us?)
I’m amazed Macy’s isn’t on that list...
Yes, it died last year (and it wasn’t clear which you were talking about, since you replied but diverged from the OP). Though it lasted about 50 years, not too bad.
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