JC Penney Files For Chapter 11 Bankruptcy Protection

[TW-Upstate NY]

I agree with you but unfortunately, sentimentality has no place in the corporate world. All you have to do is check out E-Bay or go to an antique store and see all the retail artifacts for sale and I ought to know-I've bought enough of them over the years You think for one minute fast Eddie has saved anything along those lines in regards to Sears or K-Mart. Oh, wait a minute-he probably has but then turned around and sold them for whatever he could get You know, in a sense that's what we do here without even realizing it sometimes-we're helping preserve that history that bankruptcies and mergers pretty much kick to the curb. Somebody will throw out a name of a long forgotten defunct or consolidated chain and eventually maybe a former employee will chime in with their recollections of the company and their work experiences. This is what I love about boards like this and Groceteria for example-it's what we do and know what-I think we do it pretty well.

[pseudo3d]

I agree with you but unfortunately, sentimentality has no place in the corporate world. All you have to do is check out E-Bay or go to an antique store and see all the retail artifacts for sale and I ought to know-I've bought enough of them over the years You think for one minute fast Eddie has saved anything along those lines in regards to Sears or K-Mart. Oh, wait a minute-he probably has but then turned around and sold them for whatever he could get You know, in a sense that's what we do here without even realizing it sometimes-we're helping preserve that history that bankruptcies and mergers pretty much kick to the curb. Somebody will throw out a name of a long forgotten defunct or consolidated chain and eventually maybe a former employee will chime in with their recollections of the company and their work experiences. This is what I love about boards like this and Groceteria for example-it's what we do and know what-I think we do it pretty well.

Kmart and Sears are a special case...when the companies merged, better leadership could've righted the ship and created a new plan going forward, like taking ideas from Sears Grand (and a few Sears Essentials-like stores that opened right before the merger, in former Wal-Mart buildings, no less) and repositioning Sears as a Target-like store to replace Kmart and the Sears in B-class (and below) malls, while changing the A-class Sears to a new, more upscale concept, and heck, with that rumor of SHLD buying Safeway in 2005, they could've really brought a proper food store concept to their stores without relying on third parties like Kmart did. (Of course, any and all of the chance of that sort of thing happening slowly drained out over the years, but it's a nice thought).

In the case of the "Mother Store", they really just need to license out the name to a local company and letting new management bring in some new merchandise while keeping the rest of the Penney's name and merchandise mix.

[BillyGr]

Given the location and size, the merchandise mix they had was probably more locally tailored than a typical JCPenney store. Kemmerer really doesn't have many other options.

The right thing to do, if the store does end up closing, would be to turn it in to a museum.

Maybe even better, find someone local who would buy the building and run a store to serve those needs, while also purchasing the memorabilia and keeping that there as a museum.

Could be a good combination - the local business plus getting people to visit when travelling through for the historical/museum aspect and maybe picking up something as well.

[kr.abs.swy]

All, I appreciate that we all love the thought of the legacy first JC Penney store staying open for another 100 years, but the reality is that this is a store that has not fit with JC Penney's business model for decades. It's a tiny store (I've been in it), it doesn't have many of the departments that a typical Penney's store would have, it's outdated, and it's in a tiny town. It hasn't made sense to operate it for decades, but management team after management team has looked the other way and kept it open. It's hours from any sort of metro area, so even if people were interested in it for nostalgia, it just isn't easy to get to.

It doesn't make sense to criticize JC Penney for not making some of the hard decisions that should have been made over the past few decades while at the same time telling them they should keep a store open that doesn't fit their current model and probably barely breaks even, if that, and almost certainly doesn't earn back its cost of capital. It's a distraction. Every second that an executive spends thinking about what to do with this outlier store is a second they aren't spending thinking about fixing JC Penney.

It's a fluke of history that this still exists. I can't imagine that Sears, Macys, Dillards, Target, Kohl's, etc., still operate their first store out of nostalgia. The one possible exception is Walmart, which I believe turned the original store into a museum of some sort.

All that said, I hope they figure out a way to keep it open, too.

[storewanderer]

Yes, Wal Mart's first store is a museum (and a very busy one, at that). The only thing generating revenue there is an attached snack bar (and with its prices, despite being very busy, probably not generating a ton).

One key difference there is Wal Mart's museum is in the town that still has the Wal Mart HQ. So there are a lot of Wal Mart people, vendors, etc. coming into that town for other Wal Mart-related matters who can go to see the museum as well.

Not so for the JCP which is very isolated, HQ has not been in that town in nearly 100 years, and while it is the first store it is as you point out a bit of an outlying thing.

The history thing is a little different with JCP since its roots and how it first built its company are in operating small town stores. Most of which have been closed at this point. But it probably wasn't a profitable store.

[pseudo3d]

All, I appreciate that we all love the thought of the legacy first JC Penney store staying open for another 100 years, but the reality is that this is a store that has not fit with JC Penney's business model for decades. It's a tiny store (I've been in it), it doesn't have many of the departments that a typical Penney's store would have, it's outdated, and it's in a tiny town. It hasn't made sense to operate it for decades, but management team after management team has looked the other way and kept it open. It's hours from any sort of metro area, so even if people were interested in it for nostalgia, it just isn't easy to get to.

It doesn't make sense to criticize JC Penney for not making some of the hard decisions that should have been made over the past few decades while at the same time telling them they should keep a store open that doesn't fit their current model and probably barely breaks even, if that, and almost certainly doesn't earn back its cost of capital. It's a distraction. Every second that an executive spends thinking about what to do with this outlier store is a second they aren't spending thinking about fixing JC Penney.

It's a fluke of history that this still exists. I can't imagine that Sears, Macys, Dillards, Target, Kohl's, etc., still operate their first store out of nostalgia. The one possible exception is Walmart, which I believe turned the original store into a museum of some sort.

All that said, I hope they figure out a way to keep it open, too.

Target did rebuild T-1 as a Super Target, and I imagine the others were replaced too with larger stores at some point, but all the rest of them (I imagine) were all in major metropolitan areas, and unless Kemmerer's store was losing money hand over fist, I don't see why keeping or dropping Kemmerer has anything to do with the success of JCPenney, and the last decade has a smattering of much bigger mistakes--not reigning in Ron Johnson's expensive attempt to remake the company in his image, the ill-fated attempt to go into heavy appliances, and probably more I'm not mentioning.

[BillyGr]

All, I appreciate that we all love the thought of the legacy first JC Penney store staying open for another 100 years, but the reality is that this is a store that has not fit with JC Penney's business model for decades. It's a tiny store (I've been in it), it doesn't have many of the departments that a typical Penney's store would have, it's outdated, and it's in a tiny town. It hasn't made sense to operate it for decades, but management team after management team has looked the other way and kept it open. It's hours from any sort of metro area, so even if people were interested in it for nostalgia, it just isn't easy to get to.

All that said, I hope they figure out a way to keep it open, too.

I suppose if they want to go with the nostalgia/tourist attraction thought, they should look towards South Dakota. After all, who would have thought that people from all over would know about a drug store (that, of course, has turned into much more over the years) in a small town there?

[cjd]

I've never been in a Belk. How are their stores? I've traveled to many places with a Belk but never went into one...

Isn't Sycamore the same group that runs Staples? That store has turned into such a zombie under Sycamore.

Also curious why they only want to keep 250 stores open. Maybe the plan is to do full remodels to these 250 stores and actually make them really great stores? And they can only afford to remodel that many stores? Maybe those 250 stores are at what are considered to be the remaining A malls?

If that is the case- find another buyer for remaining stores. I think those little small town 40k square foot JCP Stores are some of their better performing stores from what I see, under the current JCP format (run down outdated stores with high priced goods that lack anything beyond the bare minimum level of style and quality).

I don't see this working out at all. Why would they rebrand to Belk in the Western and Mountain States (and the East Coast?). Belk is a Southern brand. These are different markets. Very different markets. I also think JCP has a very different customer. I could see maybe eliminating JCP where there is overlap.

Maybe they have assessed that JCP is so broken that replacing it with a regional brand geared toward the Southern United States is a better bet. I do think JCP is very broken, but this is definitely not the answer.

How does Belk stand up against Dillards and Macys? Does it outperform them? Why shop Belk over Dillards or Macys (or Kohls)?

I agree, Belk is a southern store. Their merchandise mix caters more to the affluent customer that is looking for a specific look. Brands like Southern Tide, Columbia, etc. Most everything they sell is name brand, they do have a few private labels such as crown & ivy. Their shoe departments are very small. They also have a small but decent housewares department.

They lean toward the women's cosmetics and fragrance departments and have the traditional counters where they can get makeup put on to sample, etc.

I've found their stores to be pretty well stocked, but definitely higher price than JCPenney. You can find some really good deals on items there if you use coupons.

It seems to me that Belk and Bealls have done better in Florida because they are tailored more to what the shoppers are looking for, with brands and clothing toward outdoor activities here. JCPenney doesn't really offer those lines of clothings or brands - it seems what they sell here in Florida is no different than what they'd offer in most other states. Dillards and Macys don't really have that either, and especially not Kohls, from what I've seen.

Even Walmart has brands that are catered more to the area here, they have their own brands similar to what Columbia and Guy Harvey offer, for example.

[kr.abs.swy]

So when things are going well, you can toss around a bit of money at pet projects. If Amazon wants to toss $10MM building a shrine to Jeff Bezos' first garage, no one will care. JCPenney is fighting for its life. Every penny counts. They can't let distractions get in the way.

Even if the Kemmerer store is four walls EBITDA positive, it almost certainly isn't earning back its cost of capital. With rumours that JC Penney will downsize to a few hundred stores, that the Belk nameplate could replace JC Penney, that the whole chain could liquidate, etc., they can't be wasting time on anything that won't earn back its cost of capital or has potential for growth. If they are going to come out of bankruptcy, they've got to attract investor dollars. Imagine the proposal: "We're going to close half of our stores, but we're going to keep operating this store in Kemmerer, Wyoming, that doesn't meet brand standards, is barely four walls EBITDA positive (this is my assumption), doesn't fit our current operating model, is tiny and outdated and a maintenance headache, is at least two hours from the closest metro area, is in a stagnant little town of 3,000 and just doesn't make any sense. But please invest in our company, and don't ask any questions about how many other pet projects we're not telling you about." Doesn't whatever regional manager oversees this store have better things to do than make periodic visits to Kemmerer, Wyoming?

Yes, I agree, they have made bigger mistakes than continuing to operate store OOO1. All of the big mistakes, the little mistakes, and the fatal blow of covid have forced them into bankruptcy. So they no longer control their own destiny. And that means it's time to FINALLY make the tough decisions.

To be clear, I love that this store exists, I've made a point of visiting it in the past, and I love that they kept it open thus far as a tribute to their history. But I understand that if they want to survive, they can't think that way any more. Putting a credible proposal forward for the investment community is the only way they will survive.

All, I appreciate that we all love the thought of the legacy first JC Penney store staying open for another 100 years, but the reality is that this is a store that has not fit with JC Penney's business model for decades. It's a tiny store (I've been in it), it doesn't have many of the departments that a typical Penney's store would have, it's outdated, and it's in a tiny town. It hasn't made sense to operate it for decades, but management team after management team has looked the other way and kept it open. It's hours from any sort of metro area, so even if people were interested in it for nostalgia, it just isn't easy to get to.

It doesn't make sense to criticize JC Penney for not making some of the hard decisions that should have been made over the past few decades while at the same time telling them they should keep a store open that doesn't fit their current model and probably barely breaks even, if that, and almost certainly doesn't earn back its cost of capital. It's a distraction. Every second that an executive spends thinking about what to do with this outlier store is a second they aren't spending thinking about fixing JC Penney.

It's a fluke of history that this still exists. I can't imagine that Sears, Macys, Dillards, Target, Kohl's, etc., still operate their first store out of nostalgia. The one possible exception is Walmart, which I believe turned the original store into a museum of some sort.

All that said, I hope they figure out a way to keep it open, too.

Target did rebuild T-1 as a Super Target, and I imagine the others were replaced too with larger stores at some point, but all the rest of them (I imagine) were all in major metropolitan areas, and unless Kemmerer's store was losing money hand over fist, I don't see why keeping or dropping Kemmerer has anything to do with the success of JCPenney, and the last decade has a smattering of much bigger mistakes--not reigning in Ron Johnson's expensive attempt to remake the company in his image, the ill-fated attempt to go into heavy appliances, and probably more I'm not mentioning.

[storewanderer]

Also wondering how many small town stores are left? They have closed a ton of those little small town stores the past few years. It may be to the point now that while they had a few hundred of them left 3-5 years ago, now there are so few left, it no longer makes sense to keep it going.

They were supposed to have a re-org plan 7/31. That date has long passed. They could not come up with a credible re-org plan. That is now why they are talking they will sell the company... whoever buys this company needs to completely overhaul and restructure its management. I am not going to blame the current CEO for everything because the problems started about 4 CEOs ago but there are seriously deep problems in this chain's middle management, merchandising, and store operations. Internally this chain still seems to act as if it is still where it was 4 CEOs ago (profitable and stagnant, but too proud of itself to change with the times). There is where I can't completely slam the proposal to just scrap this whole chain and convert it to Belk. But I don't think Belk is doing well either... so not sure if that is the solution.