The coronavirus pandemic has pushed troubled department store chain J.C. Penney into Chapter 11 bankruptcy. It is the fourth major retailer to meet that fate.
As part of its reorganization, the 118-year-old company said late Friday it will be closing some of its stores and will disclose details and timing in the coming weeks.
It operates 850 stores and it has nearly 90,000 workers. It said that it received $900 million in financing to help it operate during the restructuring.
Many experts are pessimistic about Penney’s survival even as it sheds its debt and shrinks the number of its stores. Its fashion and home offerings haven’t stood out for years. And moreover, its middle-to-low income customers have been the hardest hit by massive layoffs during the pandemic. Many of them will likely shop more at discounters — if they shop at all, analysts say.
“This is a long, sad story,” said Ken Perkins, president of Retail Metrics, a retail research firm. “Penney offers no reason to shop there compared to its competitors, whether it’s Macy’s or T.J. Maxx or Walmart. How are they going to survive?”
Like many department stores, Penney is struggling to remain relevant in an era when Americans are buying more online or from discounters. Sears has now been reduced to a couple hundred stores after being bought by hedge fund billionaire and its former chairman Eddie Lampert in bankruptcy in early 2019. Barneys New York closed its doors earlier this year and Bon-Ton Stores went out of business in 2018.
The pandemic has just put department stores further in peril as they see their sales evaporate with extended closures. Even as retailers like Penney start to reopen in states like Texas and Florida that have relaxed their lock downs, they’re also facing Herculean challenges in making shoppers feel comfortable to be in public spaces.
Like Sears, J.C. Penney’s troubles were years in the making, marking a slow decline from its glory days during the 1960s through 1980s when it became a key shopping destination at malls for families.
The company’s roots began in 1902 when James Cash Penney started a dry good store in Kemmerer, Wyoming. The retailer had focused its stores in downtown areas but expanded into suburban shopping malls as they became more popular starting in the 1960s. With that expansion, Penney added appliances, hair salons and portrait studios.