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. Theyre 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.
Theres 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 Mens 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 storescontinuously and permanentlyfor 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.
Sears was suffering long before any Internet seriousness. Their prime opponent, Monkey Wards, which we preferred, died long ago prior to the Internet.
One big problem is department stores refusing to be department stores, divesting of appliances and electronics, etc, and getting more clothing-heavy. Along with dying (indoor) malls, which people got sick of, they started suffering.
You’ll really like it.
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My Dad loved Sears for the tools and appliances, lawnmowers, a hot water heater, etc. If something blew, you went to Sears for a new one. Everyone did.
When I was first setting up house, I went to Sears for all of that stuff, too. I still have some of my original Craftsman tools.
I loved JC Penney as a teen - they had good prices that Mom liked, and clothing styles that I liked. Mom also bought a lot of curtains and table cloths, bath towels, etc. from JCP.
We never did shop Neiman Marcus or J. Crew. Too ‘high end’ for us at the time. ;)
I would truly HATE to see NEIMAN’S go out of business, as our family has shopped there for decades.
(Mother had a “low-4 digit” customer number & knew Carrie Neiman.)
When my kid sister’s wedding invitations were “lost in the mail” in 1974, Stanley Marcus flew the N-M plane to my hometown & personally delivered the invitations to our house. = You cannot find that sort of personal service anywhere in 2020.
(He also refunded payment for her wedding gown as well, as he did NOT like “mess-ups”.)
Yours, TMN78247
So WONDERFUL now to have a real WOMAN as FLOTUS!
They just don’t know they’re dead
Yep. Sears was the go to brand in the 50s and 60s for middle America. Value quality durable. Matchless for tools appliances work clothing and bsa uniforms. I guess the public just prefers chicom crap !
sears and jcp have had serious problems self-inflicted for decades
almost everywhere has had noticeable dips in quality.
i used to find good quality shirts at kohls, about 10 years ago. it gradually worsened as vendors changed.
Pier One was going under before the corona virus, I don’t think they’ve going to make it. D@mn, I love Pier One!!!
Duluth Trading Company is a GREAT Wisconsin business from TINY Belleville, WI! :)
I’m lucky enough to have a DTC store one town away from me to the East, and I have Lands’ End to the West.
I’ll never be naked. Maybe cold and hungry, but never naked, LOL!
“Tractor Supply comes to mind for many, if not most, of their key products.”
An excellent store, too. Between TS and Farm & Fleet, what more does anyone need? ;)
Anyway, I thought I had finally made it! I went right over there and charged a set of socket wrenches (Craftsman!), a pair of blue jeans and I think a Journey and a Men At Work cassette tape.
I made the minimum payment for like 9 months after that.
I have a lot of Craftsman stuff in my tool boxes purchased in the 60s and 70s. I suspect my grandsons will be using it 50 years from now.
Wisconsin still has Macy’s, but the last time I was in one (before last Christmas) at Mayfair Mall in Milwaukee, the store was dirty, cluttered and most of the people working there did NOT have English as their first language.
I bought a few gifts, and at BOTH check outs, the clerks asked me to PLEASE apply for a job, here’s an application, or you can do it on-line, blah-blah-blah.
So, the combination of a lack of workers, which results in a messy store, sure ain’t helping things!
I WILL say that their on-line presence is very good, so that might save their bacon, but in some cases they really ‘give the store away’ with some of their sales. My BFF is a MASTER at shopping their sales and combining coupons. They usually pay HER to shop there, LOL!
I have 18 years Retail experience, post-Army; I KNOW what a store needs to sell the SIZZLE - whether or NOT they also want to sell the STEAK. ;)
LOL! Didn’t realize I was channeling my, ‘Inner Tim!’ :)
Lucky you. I am not a fan of Lands End. Quality is similar LL Bean which has degraded over the years.
That is a great story! Yep. Good luck finding that kind of service these days. :(
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