One of the biggest and oldest department store chains in America is JCPenney. It has revealed that, as part of its ongoing restructuring plan, it will be closing further stores in 2023. JCPenney has survived the test of time in many ways. But it is not exempt from the difficulties that have ruined other department stores. The 121-year-old retailer has been struggling for some time. After the COVID-19 epidemic hit in 2020, they even declared bankruptcy and closed 200 locations.
JCPenney is a brand of department stores operated by Penney OpCo L.L.C. in the United States. As of June 28, 2023, there were 667 JCPenney stores in the United States. Texas has 73 JCPenney stores, or nearly 11% of all JCPenney stores in the U.S., making it the state with the most of these stores.
As more JCPenney stores are closing, the situation could be better despite the growth of the economy. Learn more about the JCPenney stores that will be closing this spring by reading on.
About JCPenney:
James Cash Penney founded the American retail giant J.C. Penney in 1902. Its official name is J.C. Penney Corporation, Inc. It was earlier known as J.C. Penney Stores Company (1913–24) and J.C. Penney Co. (1924–68). JCPenney submitted a Chapter 11 bankruptcy petition in May 2020. Simon Property Group and Brookfield Asset Management have a deal to buy the business for about $800 million in cash and debt in September 2020. Two months later, the deal had been approved by the Southern District of Texas bankruptcy court in the United States.
In October 2021, the company opened ten new shop-in-shop locations around the United States. This includes a diverse range of brands, including indie and BIPOC brands such as flagship partner Thirteen Lune. In 2021, Marc Rosen was named C.E.O.
Simon and Brookfield, the owners of JCPenney, made an $8.6 billion bid to buy Kohl’s in April 2022. By 2023, Sephora had already planned to have an exclusive partnership with Kohl’s. Also, some of its retail locations had previously participated in a pilot program for Sephora inside Kohl’s. With this agreement, Sephora would take over and revoke previous agreements to quit JCPenney in favor of Kohl’s. Also, it will remain connected to and under the control of the Simon and Brookfield retail portfolios.
In July 2023, the business moved back into its Plano, Texas, headquarters. Over 2,000 employees work on three floors in the newly reopened corporate headquarters.
What happened to JCPenny?
For years, JCPenney has struggled with dwindling sales and earnings. It’s because consumers are choosing and spending less at traditional department stores. Also, online stores like Amazon, giant retailers like Walmart and Target, and specialized shops like Sephora and Ulta have posed tough competition.
The COVID-19 epidemic also delivered a significant hit to JCPenney’s business. This situation compelled some stores to close or run at reduced capacity temporarily. As we know, it all happened due to lockdowns and social isolation measures. In contrast to the fiscal year 2019 loss of $268 million, the business recorded a net loss of $1.7 billion for the fiscal year 2020.
JCPenney has been dealing with many issues. It includes growing expenses brought on by labor shortages, inflationary pressures, supply chain interruptions, and rent obligations. The company claimed that these difficulties have affected its cash flow and margins.
JCPenney’s Rebirth: “Navigating the Retail Revival”
People who don’t shop at a particular retailer sometimes judge its relevance. It’s a case of Wall Street versus Main Street, high income versus mid-to-low income. One of those might be JCPenney. It’s a department store operated by mall operators, two retail sectors with a lousy track record.
Yet, JCPenney’s current leadership team asserts that the historical brand is a survivor. It is returning to the roots that sustained it for 121 years. Now that the company has been privately owned for more than two years, This happened after a challenging bankruptcy restructuring. The Plano-based company claims that 50 million families visit its 667 shops and online marketplace.
Hundreds of JCPenney locations have been closed since the Great Recession. It has withstood attempts to undergo two radical transformations. It was first written by Apple retail expert Ron Johnson and later by Marvin Ellison, who is currently the C.E.O. of Lowe’s.
Marvin Ellison wanted to turn JCPenney into Sears by introducing large kitchen and laundry appliances. Both tenures cost the department store money, time, and customer and employee goodwill. But it did nothing to increase income. As a result of the pandemic, JCPenney and many other retailers faced unexpected temporary store closings.
With 55,000 employees, JCPenney emerged unharmed. It is already building a new future. JCPenny is bringing back the traditional department store strategy under new ownership and management. This approach only made it one of the most recognized retailers in America.
“Every day, our customers make trade-offs,” according to JCPenney C.E.O. Marc Rosen. “We are quite clear on where we are going, who our target market is, and what their needs and desires are.” In the past five years, Rosen has been the retailer’s third C.E.O.
Shareholders include JCPenney’s two leading mall landlords, Simon and Brookfield. Along with those, it has Authentic Brands, which has a portfolio of over 40 brands. Now, JCPenney stores carry several of those brands. This includes Sports Illustrated athletic wear, Juicy, and Forever 21 junior fast fashion.
“One of our key aspects of success is that we’re all aligned. We all want to expand our businesses,” stated Rosen. “To achieve that, a great store and online experience are required.”
According to Rosen, the old JCPenney was hindered by its inability to invest in the company. It caused it to post years of deficits.
Due to its $4 billion in debt, JCPenney declared bankruptcy in May 2020. It currently has $1.5 billion in cash assets and a long-term debt of $485 million. In December 2021, the long-term debt was lowered by $500 million. “We feel good about both our debt and our healthy cash flow,” according to Rosen.
David Simon, the chairman and C.E.O. of Simon Property, has made many statements on the department store investment. He referred to it as “road kill.” In his most recent discussions with Wall Street analysts, his comments became more positive.
According to Simon, JCPenney is “unbelievably profitable.” “We’re delighted with the company’s positioning. We are quite happy with the management group and everything they are doing to revitalize the brand.”
The financial results of JCPenney for the nine months ended October 29, 2022, have been made public by a separate liquidating trust.
According to a January filing, JCPenney reported a profit of $173 million on sales of $5.44 billion. It was a decrease from a profit of $312 million on sales of $5.58 billion in the same months of 2021. Rosen said there was powerful clothing for both men and women. Sales were flat, excluding cosmetics, as consumers felt the effects of inflation. Due to the closure of Sephora locations and the launch of new brands, the kids’ market fell.
JCPenney’s Focus on the Future: “Store Closures and Strategy”
JCPenney has decided to concentrate on the long term under Rosen’s new ownership. But stores will close now and then when leases expire and are examined; according to the C.E.O., 15 JCPenney locations are still open in Dallas-Fort Worth.
JCPenney has about two-thirds of its stores in malls and one-third outside of malls. It trims its portfolio occasionally, as many retailers do. This year, it’s closing locations in:
- Elkhart, Indiana; Youngstown,
- Ohio; Oswego, New York and
- Detroit Lakes, Minnesota.
“We are free to assess our real estate portfolio and take the necessary action,” according to Rosen. But Simon and Brookfield are the owners of some of the best malls, which also draw some of the most customers.
Brookfield and Simon got rid of some failing properties. While mall traffic increased as the pandemic faded, additional malls will eventually be converted into extra uses or destroyed.
Except for Hawaii, JCPenney continues to operate stores in every state, including Puerto Rico. It’s $8 billion in annual sales made it more significant than Old Navy and comparable in size to Dillard’s.
JCPenney’s Home Office Reopens on Legacy Drive:
The 2,640 local employees of JCPenney include 1,700 corporate employees. They have begun relocating into the 320,000 square feet of their previous headquarters on Legacy Drive.
This is around one-sixth of the campus that was constructed 30 years ago. It was expected that the relocation would be finished by the summer. The retailer left the space it was renting during its bankruptcy. It has previously sold it to raise cash during tough times.
The temporary home office space is a vacant Sears store at Brookfield’s Stonebriar Center in Frisco. Although JCPenney has experienced a reduction in customer traffic for many years, Rosen claimed that the data has started to improve. “This is our first proof,” he stated.
One optimistic sign is that Penney’s customer frequency has increased since the late summer and early fall.
JCPenney’s first closure in 2023:
According to the news, a JCPenney in Elkhart, Indiana, was likely to close. Since 1976, the store has been a mainstay at Concord Mall. It was claimed that this spring, it would close its doors forever.
Levon Johnson, president of the Greater Elkhart Chamber of Commerce, told the publications that:
JCPenney “has kind of remained one of those places that has kind of constantly attempted to bring people to that area. Even if they were not going to the mall.”
According to Johnson, there have been five different owners of Concord Mall in recent years. He cited lease pricing conflicts as the leading cause of the shutdown. It’s a little bit of a surprise, considering that they recently spent a significant amount of money in the previous six months. They spent money on the store’s renovation and lighting.
JCPenney announced the closure but provided no details about the lease negotiations. “The Concord Mall location of our JCPenney shop will be closing. The store will close by May of this year. It will follow the start of the liquidation process in February 2023. It is never an easy choice to close a store. We appreciate the hardworking employees and devoted patrons who have supported our store in Elkhart, Indiana,” the business claimed.
JCPenney is also closing a store in New York!
Another long-standing JCPenney is closing its doors in Oswego, New York. Oswego County News had received confirmation of the shutdown from a store employee. However, the employee gave no additional information about the closure’s timing or the number of affected employees.
According to the outlet, the store, which has been a fixture in Oswego Plaza since 1977, narrowly avoided closing in 2020. Pat Walsh is an Oswego local who worked at the business until 2013. He said, “They’ve been saying it would be closing for years, and finally, I guess it’s true.”
Customers are still sad to see it fade away.” It’s unfortunate. Client Bob Nolan stated, “I don’t see why they can’t stay open. As a frequent client, Charry Snyder expressed her frustration. According to her, “This is our largest clothing store.”
Rumors of another closure:
The JCPenney store in Pleasanton, California, has been the subject of rumors since the summer of 2022. According to a 2022 article in The Independent, the store is situated in Stoneridge Mall, which 300 Venture Group (3VG) has purchased.
The site’s official plans were yet to be known at the time. However, the new owners referred to the land as “prime real estate.” Additionally, 3VG stated that it is “exploring different scenarios for the property” in an effort to “maximize the value” of its investments.
Nicholas Bicardo is the broker who represented the seller in the transaction. He said, “It is likely that the Pleasanton JCPenney will close now that 3VG is in charge. As a provocative buyer, 3VG is more likely to consider other uses for the property.”
The Stoneridge Mall location was listed on the JCPenney website as of January 2023. Best Life contacted JCPenney for comment regarding the announced closures and rumors of closures. But the company has yet to respond.
JCPenney’s Positive Changes: “Brands and Beauty Expansion”
The company is doing well, according to Rosen. He had 25 years of experience at Levi’s and Walmart. Those companies also similarly serve families with few resources.
When he was employed by Levi’s, he had already collaborated with Michelle Wlazlo. It is the head merchandiser of JCPenney. According to him, JCPenney is still one of Levi’s top clients.
Wlazlo joined the organization in March 2019. Since then, she has continued fixing categories and brands. When Sephora dissolved a 15-year agreement and began moving its in-store stores to Kohl’s in 2021, there was a significant gap that needed to be filled.
As part of a collaboration with Thirteen Lune, an inclusive online retailer with brands for all racial groups, genders, skin tones, hair kinds, and price points, JCPenney Beauty launched in October 2021.
This spring, JCPenney Beauty will open 608 locations. Also, it has received favorable reviews. It is assisting the company in achieving its stated goal of becoming the go-to shop for Americans from a variety of backgrounds.
Home items required some improvement. According to Wlazlo, the well-known Fieldcrest brand of bath towels is back in the mix, along with Distant Lands. It is a new JCPenney line of towels in rich jewel tones.
JCPenney has introduced 25 brands in the last four years, 10 of which are new. In order to be more inclusive, mannequin sizes were increased. A few $500 million brands that were formerly $1 billion brands developed a greater focus. St. John’s Bay offers classic basics, whereas a.n.a. for ladies is more fashion-forward.
Some brands simply need to be loved and cared for, according to Wlazlo. Her initial task was to establish the JCPenney-owned A.N.A. brand as a leader in denim through fit, color, and silhouette. A.N.A. sales currently account for 35% to 40% of denim.
Conclusion:
Despite the difficulties, JCPenney has a positive outlook for the future. The business said that by launching new off-mall sites for its J.C.P. Beauty concept, it had made headway toward its strategic strategy. It’s because it provides a curated selection of beauty items and services catered to regional markets.
The business is rolling out new services like virtual try-on tools, buying online, picking up in-store alternatives, and reward programs. Thus, it has been improving its digital capabilities. Additionally, the business this year added tiny Toys R Us toy shops within several of its locations. Thus expanding the range of products it offers.
JCPenney claimed that the store closure was part of its long-term goal. It is done to reposition and optimize its store fleet. Thus, it will have a mix of mall and off-mall sites. It also invests in digital platforms and the customer experience.
