Washington Square’s travails: Is J.C. Penney next?


Whither Washington Square?

On Oct. 15, 2018, Sears Holdings Corp. (SHLD) filed for Chapter 11 bankruptcy, listing $6.9 billion in assets and $11.3 billion in liabilities in the filing. At that point, Sears had lost 96% of its value since it began trading under the SHLD ticker in May 2003.

Sears, one of Washington Square’s anchor stores, is closing before the year is out.

Is J.C. Penney next?


“Few retailers have experienced losses in revenue, reputation and customers like JC Penney,” Brittain Ladd, a Forbes contributor, wrote earlier this year.  “At 116 years old, the company has never been closer to death.”

In its most recent quarterly report on Nov. 15, 2018, J. C. Penney reported lower sales and a wider net loss in the quarter. It also reduced its sales guidance for the year, even in a strong climate for consumer spending.

The company’s stock closed on Dec. 14, 2018 at $1.20 a share, down from its 52-week high of $4.75 a share, its 5-year high of $11.57 a share on March 18, 2016 and its maximum of $82.23 a share on March 23, 2007.

The company has been trying to adjust to the changing retail environment for years, frantically shifting strategies and CEOs.

The most disastrous CEO was Ron Johnson, who joined the company in June 2011. He was supposed to be a magic man, given his successful oversight of Apple’s retail stores and his work at Target.

Johnson tried to move J.C. Penney into a more youth-oriented company in an upmarket space that scorned price-slashing promotions. Top accomplish his objectives, he brought in a bunch of new people, some from Apple, who didn’t mix well with J.C. Penney’s established workers. One Apple veteran, Michael Fisher, “… went so far as to deride the holdovers as DOPES, or dumb old Penney’s employees,”  Jennifer Reingold  wrote in Fortune. “Some veterans retaliated by calling the new team the Bad Apples.”

To say the least, Johnson’s radical makeover bombed as customers bolted in droves and the company recorded a $1 billion loss in 2012.

On April 8, 2013, J.C. Penney’s board accepted Johnson’s resignation.   “The Johnson era at JC Penney will go down in history as one of the most destructive reigns by any CEO in any company—ever,”  Ladd wrote.

Johnson was succeeded by Myron Ullman, who had been CEO before Johnson from December 2004 to October 2011. Ullman stayed on from April 2013 to July 2015. He then , turned the job over to Marvin Ellison and charged him with bringing the company back from the brink of disaster. Ellison made some improvements, but abandoned ship in May 2018 to lead home improvement company, Lowe’s.

Looking just at J.C. Penney’s stock price, it’s not easy to figure out which CEO had failed the most at that point. The stock dove 65% under Ullman’s first tour as CEO, 54% under Johnson, 58% under Ullman’s second tour and 66% under Ellison.


On Aug. 16, 2018, J.C. Penney reported a year-over-year revenue decline of 7.5 percent to $2.76 billion and a net loss of $101 million in its second quarter. Investors were not pleased. They sent the company’s stock below $2 a share, the lowest since it listed on the New York Stock Exchange in 1929, Reuters reported. The stock closed on Aug. 16 at $1.76.

Searching for its next CEO, Board Chairman Ron Tysoe obviously had Ron Johnson in mind when he told the Dallas Morning News, “We’re not looking for someone to reinvent J.C. Penney.”

The board’s choice for next CEO, Jill Soltau, joined J.C. Penney on October 15, 2018. She previously served as president and CEO at Jo-Ann Stores LLC, a specialty retailer of crafts and fabrics.

Shortly after Soltau’s appointment, the company reported that in the three months ending Nov. 3, 2018 its sales fell 5.8% to $2.65 billion and its net loss for the quarter grew to $151 million, up from $125 million in the same quarter a year earlier. Looking ahead, the company said it expected same-store sales to fall in the low-single digits for the fiscal year.

Despite thousands of recent store closures around the country, including the Portland metro area, retail analysts generally agree that the clearing out of stores still has a way to go.  The Wall Street Journal recently reported that the United States has 23.6 square feet of retail space per capita, compared with 2.7 square feet for Europe, according to the International Council of Shopping Centers.

Some of that U.S. space has to go and  J.C. Penney’s store at Washington Square could be one off the victims.

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