J.C. Penney Could be in Danger of Following Sears Into Bankruptcy


The longtime department store rivals have made similar missteps and could share a similar fate. Like Sears, J.C. Penney hasn’t been profitable since 2010. It posted $3.9 billion in losses since then and has been closing stores in an an attempt to stanch the bleeding.

And like Sears, it has run up debt while its credit rating has sunk deep into junk territory. Analysts are forecasting another money losing quarter when the company reports earnings on Thursday. That’s not a surprise. Analysts expect losses to go on for years.

But this is the first quarterly report by new CEO Jill Soltau, who was hired in October to replace CEO Marvin Ellison. Ellison jumped ship in May to run Lowe’s. In September, CFO Jeffrey Davis left the company as well. The company’s executive turmoil, along with inventory and supply chain struggles, have raised concerns by outside observers.

J.C. Penney is in a quiet period ahead of Thursday’s quarterly report and not able to comment for this story. Despite its problems, some opportunities could keep J.C. Penney out of bankruptcy court for a while, at least.

This slideshow requires JavaScript.

Because its near-term debt payments are relatively modest — about $50 million is due next year, and $100 million in 2020 — it has some time. But not much. An estimated $2.1 billion in payments comes due in 2023, and that has credit rating agencies and analysts worried.

The Complete Penny Stock Course: Learn How To Generate Profits Consistently By Trading Penny Stocks

It also could benefit from Sears‘ demise. An analysis by Cowen and Co. found that 56% of Sears shoppers also shop at J.C. Penney, the highest overlap of any of the traditional department store chains.

The shoppers share similar demographics, according to research by Coresight Research and Cowen. For example, the average age of a Sears shopper was nearly 50, according to Coresight. At Penney, it’s just over 48.

Sears will be closing hundreds of stores and its customers will be looking for places to shop. So some experts say there’s still a chance that J.C. Penney can avoid bankruptcy. They point to department store chains like Macy’s and Kohl’s which have been able to turn around and become profitable, despite changing shoppers’ tastes. And Penney has improved its online sales, which rose more than 10% last year.

“I do think there is a place for traditional department stores. There’s a chance they can still be relevant. A lot of their private labels have value,” said Andrew Bove, credit analyst at Standard & Poors. “JC Penney just has to stop hurting itself with supply chain and inventory missteps and figure out a way to differentiate itself.”

Learn to Trade Momentum Stocks

But others don’t see a way for J.C. Penney to survive long-term. “They’re in a leaky boat that eventually will sink,” Mark Cohen, the director of retail studies at the Columbia Business School, told CNN earlier this summer. “The prognosis for the future is not happiness.”

8 thoughts on “J.C. Penney Could be in Danger of Following Sears Into Bankruptcy

  1. Pingback: Walmart raises its sales and profit goals as it rides e-commerce gains and a strong U.S. economy – Stock Market News Today

  2. Pingback: J.C. Penney Could be in Danger of Following Sears Into Bankruptcy – Snapzu World News

  3. Pingback: J.C. Penney Could be in Danger of Following Sears Into Bankruptcy – Snapzu Business

  4. Pingback: J.C. Penney Could be in Danger of Following Sears Into Bankruptcy – Snapzu Lifestyle

  5. Pingback: J.C. Penney Could be in Danger of Following Sears Into Bankruptcy – Snapzu Politics

  6. Pingback: Today’s Stock Market News – World Markets Five Top Themes For the Week Ahead – Stock Market News Today

  7. Pingback: J.C. Penney announced Tuesday that holiday sales fell and it plans to close three stores by the spring as part of an ongoing evaluation of its performance – Stock Market News Today

  8. Pingback: Levi Strauss & Co. Wednesday Filed Paperwork For An Initial Public Offering Of Shares And It Hopes To Raise More Than $600 Million – Today’s Stock Market News

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.