J. C. Penney Company, Inc is preparing for bankruptcy with plans of closing 200 of its stores nationwide, according to a news story from Reuters last week.
The retail store has struggled over the years, competing against a paradigm shift in consumer behavior that has favored online shopping and big-box discount stores. Though the 118-year-old company reported more than $10 billion in net sales last year, it is also marred by billions of dollars in debt.
Reuters’ report comes within days after the company’s announcement that it had “reaffirmed” its 16-year partnership with Sephora USA, Inc. The partnership, which was first established in 2006, has established a boutique within a storefront for the cosmetic company.
However, the partnership was soiled by virus-related shutdowns in recent months. Sephora sought to end the agreement after JCPenney furloughed employees, a move the cosmetic chain claimed was a breach in contract. Though Sephora’s stand-alone stores were closed, those employees were not furloughed. JCPenney said its decision allowed workers to collect unemployment insurance until stores reopened.
The two companies settled out of court last week without disclosing terms.
The Labor Department reported last week that unemployment claims have reached 33.5 million since shutdowns were first issued seven weeks ago. The shutdowns have caused financial burdens across the board. Businesses have been severed from revenue streams. State and local governments have also been unable to collect taxes off of retail sales and hospitality services. In New York, counties outside of New York City are in line to lose approximately $2 billion. Gov. Andrew Cuomo said two weeks ago that New York state is prepared to suffer a windfall of $15 billion.
The loss of customers walking through storefronts and shopping malls have accelerated the decline for many brick and mortar companies.
At the close of the 20th century, Sears, Macy’s and JCPenney were three of the largest retailers in the country. Sears closed after failing to adapt to online retailing. JCPenney suffers under the weight of $4 billion in debt, towards which it failed to pay interest last month.
Macy’s had maintained the country’s mantle of largest department-store chain but was forced to furlough the majority of its 130,000 employees amid virus-related shutdowns to its 550 stores.
Nonetheless, Macy’s has struggled. In February, it announced it would close more than 100 underperforming stores. Last week, the publicly-owned company reported it would delay its quarterly reporting to shareholders. Last month, the 161-year-old company was dropped from Standard & Poor’s 500 index after shares of its stock lost nearly 70 percent of its value in the past year.
JCPenney unveiled a reimagined brand of its store, including a revised shopping experience for one of its stores outside of Dallas. The new storefront included fitness classes, a barbershop and a “selfie” studio to enhance its customers’ shopping experience. The chain’s chief executive officer had said the concept was the result of more than a year of consumer research.
“Our customers are at the heart of everything we do,” said Jill Soltau. “They told us that they want a retailer that reflects their lives, makes them feel good about themselves, is fun to shop and truly understands the important moments in their lives, big and small. We bring that complete experience to life at our brand-defining store.”
Soltau continued, “this store is more than a renovated location, it is the fullest articulation of our customer-centered strategy, an investment in our future and a lab to inform decisions to return JCPenney to sustainable, profitable growth.”
According to JCPenney’s website, the retail chain operates approximately 850 locations across the United States including storefronts at Crossgates Mall and Clifton Park Center. The chain’s first location was founded in 1902 by James Cash Penney, who named his Kemmerer, Wyoming store The Golden Rule.
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