The coronavirus pandemic has pushed troubled department store chain J.C. Penney into Chapter 11 bankruptcy. It is the fourth major retailer to meet that fate.
As part of its reorganization, the 118-year-old company said late Friday that it will be closing some of its stores and will disclose details and timing in the coming weeks.
It operates 850 stores, including five in the Richmond region, and it has nearly 90,000 workers. It said that it received $900 million in financing to help it operate during the restructuring.
Many experts are pessimistic about Penney’s survival even as it sheds its debt and shrinks the number of its stores.
Its fashion and home offerings haven’t stood out for years. And its middle-to-low-income customers have been the hardest hit by massive layoffs during the pandemic. Many of them will likely shop more at discounters — if they shop at all, analysts say.
“This is a long, sad story,” said Ken Perkins, president of Retail Metrics, a retail research firm. “Penney offers no reason to shop there compared to its competitors, whether it’s Macy’s or T.J. Maxx or Walmart. How are they going to survive?”
Like many department stores, Penney is struggling to remain relevant in an era when Americans are buying more online or from discounters.
J.C. Penney’s troubles were years in the making, marking a slow decline from its glory days during the 1960s through 1980s when it became a key shopping destination at malls for families.
The company’s roots began in 1902 when James Cash Penney started a dry good store in Kemmerer, Wyo. The retailer had focused its stores in downtown areas but expanded into suburban shopping malls.
But since the late 1990s, Penney struggled with weak sales and competition from discounters and specialty chains. Penney’s began flirting with bankruptcy nearly a decade ago when a disastrous reinvention plan spearheaded by then-CEO Ron Johnson caused sales to go into free fall.
Since then, Penney’s has undergone a series of management changes, each employing different strategies that failed to revive sales. The company has suffered five straight years of declining sales, which now hover around $11.2 billion.