Will JCPenney be able to avoid Sears' fate?

JCPenney could be in danger of following Sears into bankruptcy.The longtime department store rivals h...

Posted: Nov 14, 2018 7:31 PM
Updated: Nov 14, 2018 7:31 PM

JCPenney could be in danger of following Sears into bankruptcy.

The longtime department store rivals have made similar missteps and could share a similar fate.

Business and industry sectors

Business, economy and trade

Companies

Department stores

JCPenney

Retail and wholesale trade

Sears Holdings

Company activities and management

Company earnings

Financial performance and reports

Financial results

Like Sears, JCPenney 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 (LOW). 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.

JCPenney (JCP) 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 JCPenney out of bankruptcy court for a while, at least.

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.

It also could benefit from Sears' demise.

An analysis by Cowen and Co. found that 56% of Sears shoppers also shop at JCPenney, 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 JCPenney can avoid bankruptcy. They point to department store chains like Macy's (M) and Kohl's (KSS) 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."

But others don't see a way for JCPenney 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."

-- CNN's Nathaniel Meyersohn contributed to this report.

Minnesota Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 38136

Reported Deaths: 1508
CountyConfirmedDeaths
Hennepin12329786
Ramsey4855227
Stearns236119
Dakota233090
Anoka2200109
Nobles16686
Olmsted112415
Washington108240
Mower9512
Rice8427
Scott7154
Clay58738
Kandiyohi5731
Blue Earth4702
Wright4655
Todd4012
Carver3761
Lyon3122
Sherburne3125
Freeborn2920
Steele2311
Watonwan2240
Benton2153
St. Louis17815
Martin1685
Nicollet16612
Cottonwood1360
Goodhue1308
Winona12415
Crow Wing10612
Pine1030
Le Sueur1001
Chisago981
Otter Tail931
McLeod910
Carlton870
Dodge860
Polk812
Chippewa791
Unassigned7737
Isanti720
Waseca680
Douglas640
Itasca6412
Murray630
Meeker611
Morrison591
Becker560
Faribault560
Jackson550
Sibley542
Pennington510
Pipestone442
Renville352
Mille Lacs342
Wabasha330
Rock310
Beltrami300
Brown302
Fillmore300
Yellow Medicine300
Houston250
Swift211
Norman200
Wilkin203
Redwood180
Roseau160
Aitkin150
Cass152
Koochiching151
Wadena150
Big Stone140
Kanabec141
Marshall120
Grant110
Lincoln100
Pope100
Mahnomen81
Clearwater70
Hubbard60
Lake60
Traverse60
Lac qui Parle40
Stevens40
Red Lake30
Kittson20
Cook10
Lake of the Woods00

Iowa Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 31430

Reported Deaths: 720
CountyConfirmedDeaths
Polk6578179
Woodbury324144
Black Hawk228758
Buena Vista171211
Johnson12928
Dallas128129
Linn127782
Marshall104919
Scott79810
Story7753
Pottawattamie72611
Wapello70830
Dubuque69922
Crawford6782
Muscatine63844
Sioux4720
Tama46529
Wright3841
Louisa36113
Jasper32417
Plymouth3225
Warren2861
Dickinson2672
Washington2409
Webster2192
Hamilton1881
Cerro Gordo1781
Boone1481
Clay1340
Clarke1312
Allamakee1284
Mahaska11617
Clinton1131
Shelby1130
Poweshiek1058
Carroll981
Pocahontas961
Bremer946
Des Moines902
Franklin900
Emmet870
Henry863
Cedar841
Taylor790
Monona760
Cherokee751
Floyd752
Hardin750
Marion700
Benton671
Guthrie664
Sac640
Jefferson630
Osceola610
Jones580
Butler552
Hancock540
Humboldt541
Lee542
Harrison530
Buchanan521
Delaware511
Iowa510
Monroe516
Fayette500
Calhoun492
Madison472
Clayton443
Lyon440
Palo Alto410
Davis401
Grundy380
Winneshiek380
Mills370
Mitchell370
Kossuth350
Howard340
Jackson320
Chickasaw310
Lucas314
Greene290
Union280
Winnebago280
Ida240
Cass220
Keokuk211
Van Buren210
Appanoose203
Page200
Worth190
Audubon161
Unassigned160
Adair150
Ringgold150
Decatur110
Montgomery102
Wayne100
Adams80
Fremont70
Rochester
Clear
72° wxIcon
Hi: 87° Lo: 68°
Feels Like: 72°
Mason City
Clear
70° wxIcon
Hi: 89° Lo: 69°
Feels Like: 70°
Albert Lea
Clear
72° wxIcon
Hi: 86° Lo: 69°
Feels Like: 72°
Austin
Clear
72° wxIcon
Hi: 87° Lo: 68°
Feels Like: 72°
Charles City
Clear
73° wxIcon
Hi: 88° Lo: 69°
Feels Like: 73°
Hot, sticky, and stormy
KIMT Radar
KIMT Eye in the sky

Latest Video

Image

How did businesses do on the 4th of July with tourism

Image

Stewartville's Will Tschetter commits to Michigan

Image

Covid-19 concerns, Rochester Boys and Girls Club temporarily closes

Image

Looking at the Role of School Resource Officers

Image

Seans 4pm Weather 7/6

Image

Treasury Department unveils relief loans

Image

Mandatory Mask Mandate for Rochester

Image

Approving Cares Act Funding

Image

Mountain Bike Trail System Being Developed

Image

Seans 6am Weather 7/6

Community Events