JC Penney Files For Chapter 11 Bankruptcy Protection

[buckguy]

Let me give you guys my real take on all of this:

JCPenney has had a massive identity crisis for 20-30 years. They don't know what to sell to who at what price. They've had issues keeping CEO's that were focused on more than just leaving their mark on the business. To me, JCP can be a lot of things, especially in apparel and home. They cannot be a full line retailer, and they cannot be everywhere.


Amazon is interested in 2 aspects of JCP: the insanely large mall stores and their apparel business. Amazon needs space now. JCP would give them 840+ outlets plus a tested distribution system AND the apparel they so badly lack in. It would also give immediate retail to a company whose only local outlets are overpriced Whole Paycheck Foods, which didn't help the bottom line. I suspect the holdup to the closing list is that Amazon wants all or none.

I think this captures two important considerations here--JCP has been limping along for years w/o a sustained coherent direct. They are a mature business with limited geographic or product line room to grow. In the distant past, the mature business and the loyal customer base would have made them a "widows and orphans" stock and the company would have had incentives to maintain the status quo and as long they didn't get too stodgy and conservative, they would have done ok. But now, there are expectations that profits and stock prices keep going up even if the core business really can't support it.

I don't know how seriously to take the Amazon rumors, but JCP has a ton of stores and they've gotten out of the small town locations and the worst of the metro area malls, so 29% could include some decent real estate that could be of interest to Amazon. They're opening a super market within walking distance of me, which also will be within a few blocks of Whole Foods, Trader Joe's and Safeway---should be interesting. What makes Amazon attractive online (having everything) will be more difficult in a brick and mortar and even with gimmicks like no-human interaction as in their c-stores, it is a gamble. One other thing to consider---they have been looking at malls for awhile---several dead malls have been totally or partially torn down and replaced by their fulfillment centers, and others are under consideration for this purpose.

[babs]

Let me give you guys my real take on all of this:

JCPenney has had a massive identity crisis for 20-30 years. They don't know what to sell to who at what price. They've had issues keeping CEO's that were focused on more than just leaving their mark on the business. To me, JCP can be a lot of things, especially in apparel and home. They cannot be a full line retailer, and they cannot be everywhere.


Amazon is interested in 2 aspects of JCP: the insanely large mall stores and their apparel business. Amazon needs space now. JCP would give them 840+ outlets plus a tested distribution system AND the apparel they so badly lack in. It would also give immediate retail to a company whose only local outlets are overpriced Whole Paycheck Foods, which didn't help the bottom line. I suspect the holdup to the closing list is that Amazon wants all or none.

I think this captures two important considerations here--JCP has been limping along for years w/o a sustained coherent direct. They are a mature business with limited geographic or product line room to grow. In the distant past, the mature business and the loyal customer base would have made them a "widows and orphans" stock and the company would have had incentives to maintain the status quo and as long they didn't get too stodgy and conservative, they would have done ok. But now, there are expectations that profits and stock prices keep going up even if the core business really can't support it.

I don't know how seriously to take the Amazon rumors, but JCP has a ton of stores and they've gotten out of the small town locations and the worst of the metro area malls, so 29% could include some decent real estate that could be of interest to Amazon. They're opening a super market within walking distance of me, which also will be within a few blocks of Whole Foods, Trader Joe's and Safeway---should be interesting. What makes Amazon attractive online (having everything) will be more difficult in a brick and mortar and even with gimmicks like no-human interaction as in their c-stores, it is a gamble. One other thing to consider---they have been looking at malls for awhile---several dead malls have been totally or partially torn down and replaced by their fulfillment centers, and others are under consideration for this purpose.

JCPenney's real estate would be worth very little to Amazon. Why?

Most of JCPenney's store are located in malls. Would it work as a distribution center? In most cases, the zoning wouldn't allow for it. They tend to be two story locations that make them logistically challenging. The mall owners would be against it. While they would be paying rent, mixing truck traffic and shopper traffic is a recipe for disaster. It does nothing to drive mall traffic and could actually work against it. . Go visit an Amazon distribution center and see how they operate. Could they buy a mall and tear it down. Possible, actually likely in some cases, but that's way more than just JCP.

Would it work as a Whole Foods type fulfillment center? Not really. Again, the locations just aren't suited for that. There are tons or empty big box stores that would work much better.

Does Amazon need JCPenney's apparel expertise? Now this one is funny! St John's Bay at Amazon? If JCP was good at apparel, they wouldn't be in BK. Let's keep in mind that Amazon is already the largest seller of apparel online. They can hire the talent they need or want to build this part of the business out. Buying someone like VF with their lineup of brands brings a lot more to the table.

Amazon is worth over $1 trillion dollars and could afford to buy anyone with their stock. Buying JCP out of the clearance bin isn't something they would need or want. This is an empty rumor that's no more valid than rumors they were interested in AMC, ToysRUs, Kroger, or dozens of others.

[klkla]

Here’s an interesting article that goes into what an Amazon owned JC Penney might look like: https://www.fool.com/investing/2020/05/ ... -like.aspx

I am kind of hoping that Amazon is serious about this! Plus it also has a space in Seattle that they could put in a Amazon designed department store where they would have a blank slate! They could put in a JC Penney or more likely a Amazon branded department store in the old Bon Marche/Macy’s space in Downtown Seattle! It would make sense as Amazon has offices in that building!

Based on that article it sounds like they just want the real estate. Liquidate Penneys and then open Amazon Prime department stores in those spaces. Actually makes sense.

[pseudo3d]

Here’s an interesting article that goes into what an Amazon owned JC Penney might look like: https://www.fool.com/investing/2020/05/ ... -like.aspx

I am kind of hoping that Amazon is serious about this! Plus it also has a space in Seattle that they could put in a Amazon designed department store where they would have a blank slate! They could put in a JC Penney or more likely a Amazon branded department store in the old Bon Marche/Macy’s space in Downtown Seattle! It would make sense as Amazon has offices in that building!

Based on that article it sounds like they just want the real estate. Liquidate Penneys and then open Amazon Prime department stores in those spaces. Actually makes sense.

Amazon has no idea or real interest in brick & mortar industry. For instance, Amazon Books is run by website algorithms and isn't particularly deep...looking at the photos, it resembles more of an expanded airport "bookstore" than a real bookstore.

[klkla]

Amazon has no idea or real interest in brick & mortar industry. For instance, Amazon Books is run by website algorithms and isn't particularly deep...looking at the photos, it resembles more of an expanded airport "bookstore" than a real bookstore.

The article goes into that. I have no idea how accurate it is, but it's an interesting 'out of the box' type of thinking that Amazon is famous for.

"Anyone who's ever been in one of Amazon's four-star stores will know it's not just a bookstore. It's also a showcase for the company's technologies, as well as items that are in demand at Amazon.com. The stores are full of presentation tables with unboxed merchandise for shoppers to touch and even play with, including Amazon's home-grown gizmos like its Echo smart assistants and Kindle tablets. By the stores offering hands-on experiences, browsers may be more likely to become buyers.
It's not just a more tactile experience four-star shoppers will enjoy, though. The company also arranges in-store events to entertain and educate consumers. For example, several of Amazon's four-star locations held a "New Year New You" event that coached shoppers on how to adhere to their New Year's resolutions.
Other retailers have hosted similarly enticing events and let shoppers touch the merchandise as well, but Amazon has already proven it's willing to take the idea to the next level."

"Finally, if Amazon does end up acquiring J.C. Penney out of bankruptcy, don't be surprised to see a major effort to meld the online retailer's existing web presence with the in-store experience. This includes in-store pickup of goods purchased online as well as the acceptance of returns of goods purchased at Amazon.com. These are services most of its stores as well as several non-Amazon retailers like Kohl's already offer, one way or another. Given the success so many other retailers such as Walmart and Target have also found with curbside pickup of online orders, it's likely Amazon would do the same.
It's not just about a more convenient and friendly shopping experience, however. Physical stores are ultimately an opportunity to make Amazon Prime an even more useful subscription-based offering. How a Prime membership would be integrated within a brick-and-mortar setting is up to Amazon, but coupons and value-added services like gift wrap are a couple of possibilities.
Of course, all of it is ultimately meant to supply Amazon with more data about consumers."

[babs]

Amazon has no idea or real interest in brick & mortar industry. For instance, Amazon Books is run by website algorithms and isn't particularly deep...looking at the photos, it resembles more of an expanded airport "bookstore" than a real bookstore.

The article goes into that. I have no idea how accurate it is, but it's an interesting 'out of the box' type of thinking that Amazon is famous for.

"Anyone who's ever been in one of Amazon's four-star stores will know it's not just a bookstore. It's also a showcase for the company's technologies, as well as items that are in demand at Amazon.com. The stores are full of presentation tables with unboxed merchandise for shoppers to touch and even play with, including Amazon's home-grown gizmos like its Echo smart assistants and Kindle tablets. By the stores offering hands-on experiences, browsers may be more likely to become buyers.
It's not just a more tactile experience four-star shoppers will enjoy, though. The company also arranges in-store events to entertain and educate consumers. For example, several of Amazon's four-star locations held a "New Year New You" event that coached shoppers on how to adhere to their New Year's resolutions.
Other retailers have hosted similarly enticing events and let shoppers touch the merchandise as well, but Amazon has already proven it's willing to take the idea to the next level."

"Finally, if Amazon does end up acquiring J.C. Penney out of bankruptcy, don't be surprised to see a major effort to meld the online retailer's existing web presence with the in-store experience. This includes in-store pickup of goods purchased online as well as the acceptance of returns of goods purchased at Amazon.com. These are services most of its stores as well as several non-Amazon retailers like Kohl's already offer, one way or another. Given the success so many other retailers such as Walmart and Target have also found with curbside pickup of online orders, it's likely Amazon would do the same.
It's not just about a more convenient and friendly shopping experience, however. Physical stores are ultimately an opportunity to make Amazon Prime an even more useful subscription-based offering. How a Prime membership would be integrated within a brick-and-mortar setting is up to Amazon, but coupons and value-added services like gift wrap are a couple of possibilities.
Of course, all of it is ultimately meant to supply Amazon with more data about consumers."

My sources tell me Amazon bookstores are struggling. Newer locations opened up as Amazon Four Star stores with few books and is more of a showcase. Many of the older bookstores have been remodeled to reduce the book selection and add other products. It appears the chain is still a work in progress.

[Alpha8472]

JCPenney would be a bad fit for Amazon. If they could split up the JCPenney stores into Whole Foods Supermarkets and lease out the rest of the space, that might be an option.

Those Amazon bookstores are not to sell books. They are there to show off the Alexa products. The Amazon bookstore in my city got rid of the Peet's Coffee Cafe. That was the only reason why many people would even bother to go there. The store has only a limited selection of the most popular books. There were empty spaces on the shelves. The focus is not to sell books. The store does not even take cash. There are no chairs, no sofas, and no tables. You cannot even sit down. The store is made so that you go in and you might see a new book and buy it. That is it. If you do not see what you want, the employees tell you to order on Amazon.com. This entire store is made to make you visit the Amazon website since there is so little to buy in the store.

The other main purpose is to let you see an Alexa product in person so that you can buy it. Then you can have Alexa track your likes and spending habits. Then you can order from Amazon.com using Alexa. The ultimate goal is to make you spend money at Amazon.com or pickup an Amazon.com order.

[storewanderer]

I think the big thing is most of Amazon's retail efforts are a small number of locations with small footprints. You can do whatever you want with a few locations, lose a ton of money, and it will not matter.

Whole Foods is different as it was an established chain with the best profit margins in the grocery industry and a strong reputation.

But when you are taking 800 or 600 stores and footprints of 100,000 square feet+ suddenly it is a different situation... Amazon could not take that number of locations and that amount of square footage and act as if they can sustain unlimited losses. It would be too much.

[buckguy]

Amazon practically invented the position of Wall Street darling without actually turning a profit, so the idea of them (and their investors) tolerating large losses is plausible. Profitability is a different question than plausibility of making the move.

Brick and mortar would enable them to do more with softlines---returning items by mail is an annoyance. JCP also would enable them to get into private label merchandise, which is something they haven't done. It also gives them a new distribution channel and additional data on more middle income shoppers than the core of Whole Foods. The whole point of books was getting data on a demographic to whom they could sell other things. The JCP footprint also would help insulate them from Walmart's expansion of e-commerce. On the one hand, Walmart has failed miserably with it's non-WM online operations, while otherwise WM online is their only bright spot. WM's strength has always been logistics over everything else and that could make them more formidable as a competitor to Amazon in the future.

At this point, WM and Amazon are both "tainted" brands in different ways. I suspect that one reason WM has failed with its acquired sites is that once people know who owns them, they go elsewhere. Amazon is a target for political reasons from the White House and its labor and small business practices have drawn criticism on the other end of the political spectrum. They also have disappointed some of their Whole Foods customers with the tweaks they've done to the stores' operations. They need new ways to grow the business and even though WM has their own problems, Amazon needs to be sure it can neutralize a more middle income competitor.

[storewanderer]

JC Penney in Reno, NV is still closed with no sign of when it will be opening. It looks pretty stupid when the other mall anchors (Macy's, Dick's, Forever 21) are open. There are stickers on the door about a 20% off Spring Sale but who knows what that is or when those signs were posted.

This chain is so poorly managed, words cannot describe.