Spotlight J.C. Penney: Will It Close 20 Stores or 200? Bankruptcy Anyone?

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Analysts debate how many stores J.C Penny will close this year. The numbers vary widely.

The Wall Street Journal reports Landlords Relish—or Fear—J.C. Penney Store Closings.

Real-estate executives said J.C. Penney could announce as few as 20 or as many as 200 stores will close. Shopping center owners will also be assessing how sustainable the company’s plan is for the remaining stores.

J.C. Penney said it prefers stores between 70,000 and 90,000 square feet, a sweet spot that enables it to display all its merchandise without having excess space, say property executives who spoke with the retailer. Some stores are as big as 150,000 square feet.

As with Sears, landlords are welcoming or dreading a J.C. Penney closing based primarily on how likely they are to find a preferable replacement.

Those with better-located shopping centers are eager for J.C. Penney (and its decades-old leases) to exit so they can attract higher-paying tenants. J.C. Penney pays as little as $3 a square foot in gross rent. Landlords say that they can get more than four times the rent for some of the spaces.

But owners of struggling malls are considering rent reductions to keep the chain from leaving. The department store’s departure could also allow other mall tenants to seek rent concessions or close their stores before their leases end without penalty.

No Reason for Being

What exactly does J.C Penney offer as a reason for being?

I cannot come up with anything. More importantly, nor can the market.

J.C. Penney Monthly Chart

J.C. Penney Looks Terminal

How many stores will J.C. Penney close in 2019? That's the wrong question.

Here's the right one: Can J.C. Penney survive at all?

For whatever reason, or no reason at all, millennials and generation Z abandoned the store.

It's a store with no reason for being. Unless it finds a reason for being, and quickly, it's destined to go the way of Sears, Montgomery Ward, and Payless.

Mike "Mish" Shedlock

Comments (16)
No. 1-14
Casual_Observer
Casual_Observer

Sears, JCPenny and others lost their way because they couldn't appeal to the next generation. It is going to end badly once the next recession hits for more stores. The GAP is going to be the next big victim. Old navy and banana republic continue to thrive based on the bifurcation of America.

plashadpobedy
plashadpobedy

The last time I shopped Penneys for boxer shorts, they were double the cost of Wal-Mart. Pretty much the same stuff. $3.50 a pack at Wal-Mart vs. $7/pack at Penneys.

wootendw
wootendw

I shopped at a Penney's near Spring Hill, FL last week. Bought two stain-resistant shirts for my 89-year-old Dad who constantly drools on his shirts due to a stroke. Why Penney's? My sister-in-law was driving and she said Penney's had clothes for older folks.

wootendw
wootendw

Be sure to only press the 'submitted' button once. Otherwise you may post multiple copies of your comment.

KurtR2828
KurtR2828

I wish the writers on this site would pay attention to detail. The store's name is JCPenney. No periods. An "e" precedes the "y."

Tessie56
Tessie56

Retail stores are always competing. Saying things like that is not relevant. Think positive about the economy. We are lucky to have what we have.

pvguy
pvguy

"What exactly does J.C Penny offer as a reason for being?"

They used to offer better quality than Walmart for slightly more money. I don't buy clothes often enough to say if that is still true. I suppose that is part of their problem. And Payless Shoes is done for, and they reliably had shoes in my size. That will be a bigger problem given no two companies can agree what size my feet are.

Greggg
Greggg

Does Penny's still sell polyester pants? Ain't been there in a while.

Six000mileyear
Six000mileyear

The chart of number of stores looks like upside down hockey stock is happening.

Bam_Man
Bam_Man

Never underestimate how long a zombie company like JCP can remain "un-dead" in an era of unlimited, cheap financing.

Carl_R
Carl_R

I wasn't surprised that Monkey Wards was the first of the big three catalogue/department stores to go, but I never expected JCPenney to outlast Sears, yet they did. They are probably going to follow the other two, however.

Another medium sized retail chain beat them to bankruptcy, though. Shopko, with over 300 stores in 20+ states filed for protection in January.

Stuki
Stuki

Department stores are on their way out, for the same reason they once replaced Mom-and-Pops: People prefer as great an inventory as possible. Not a highly limited one, curated by someone else, who pretends to "know the local market" or whatnot.

Online merchants can keep their entire inventory centralized. Or even aggregate a million separate inventories behind one, easily searchable, storefront. For anything other that the most immediate of needs, this trumps 150,000 square feet by orders of magnitude.

Once logistics reaches a level of precision, individualization and efficient aggregatization (is that even a word?) that allows ordering directly off of production schedules at every Chinese, and non-Chinese, factory out there, online merchants will slowly be squeezed out, as well.

It's just basic economics. When shopping, like in all other endeavors, people optimize as best they can. The closer to a fully global domain over which they can optimize, the more globally optimal their resulting utility will be.

shamrock
shamrock

What I don't like is you never know if you are getting their best price because you haven't clipped the right fucking coupon. Same with Macy's.

KidHorn
KidHorn

JCP was/is a good place to buy curtains. And they would accept returns without question. There are some things that people prefer to buy in person, Clothes and food. I don't see that changing. So department stores can survive selling clothes. And maybe appliances since people want installation and haul away. But there are too many stores to support this. The weak stores will go under and whoever survives will be in good shape.