After a brutal 2018, the carnage in the retail industry continues into 2019. Today The Wall Street Journal reports that J.C. Penney could follow its long-time rival Sears into bankruptcy. Missteps by management and failed rejuvenation attempts have led J.C. Penney to the brink. Suzanne Kapner reports:
J.C. Penney Co.’s JCP +0.00% sales are falling, its stores are stuck in malls and the turnaround strategy keeps changing. Now, three months after the embattled retailer hired a new chief executive, a handful of senior positions remain vacant.
The series of events is prompting analysts and other industry experts to question whether Penney can avoid the fate of fellow department-store operator Sears Holdings Corp., which filed for bankruptcy and barely staved off liquidation.
“Penney is a broken business,” said Mark Cohen, director of retail studies at Columbia Business School. “They are looking at a very problematic 2019. It’s the mistakes of the past coming home to roost.”
The Plano, Texas-based chain was once the go-to apparel retailer for middle-class families. It and Sears had once dominated American retailing but lost their customers, first to discounters like Walmart , then to fast-fashion retailers and off-price chains like T.J. Maxx. The shift to online shopping hastened their decline.
A strengthening economy brought Penney’s problems into sharper focus. It scaled back discounts and private brands, and focused on appliances at the expense of apparel. At a time when consumers have been spending, Penney posted a 3.5% decline in holiday sales and said it would close more stores, following a string of weak results.
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