Author Topic: J.C. Penney to file for bankruptcy as soon as next week  (Read 2079 times)

jaxlongtimer

  • Sr. Member
  • ****
  • Posts: 459
Oddsmakers don't seem to be giving Penney's much of a chance unfortunately.  Penney's is already highly leveraged, has an outdated. stale and very weak brand image and has no remaining resources to realistically catch back up to Walmart, Target, Amazon, Costco, etc.

It's another example of a great American company (118 years old) being run into the ground by greedy private equity firms.  In the case of retailers, they have leveraged these firms to the hilt on the backs of the retailers' real estate holdings and favorable leases leaving no margin for error in operations.  Hit a deep recession, an epidemic or just the need to reinvest capital into updating the business model vs. leveraging the firms to enable paying out fat dividends, fees and stock buybacks and you get what you are seeing nowadays.  Neiman Marcus, J Crew, Sears-kmart, Penneys, etc. & more to come.

The #1 thing you see most of the great tech companies doing is accumulating massive capital (tens to hundreds of billions in hard cash reserves) vs. significant payouts to shareholders in relation to their profits and accumulated equity.  Its what is enabling them to stay cutting edge year after year and expand into new ventures.  And, not one of them is mentioned in the same breath as bankruptcy.  More businesses should move in this direction and this epidemic may force their hands - if they survive long enough to do so.

bl8jaxnative

  • Sr. Member
  • ****
  • Posts: 480
Which private equity firm has ran JC Penney into the ground?

Steve

  • The Jaxson
  • Hero Member
  • *****
  • Posts: 3424
I'm not convinced they're done for. At a minimum, I give them better odds than Sears (though that's a VERY low bar). While the turnaround was FAR from complete, there were some positives coming out of there before COVID-19. Was it enough to start righting the ship? We'll never know.

Looks like they're able to leverage their real estate for $900M in cash. They'll then use this to pay off debt and keep some stores open. This isn't a panacea, but could buy them some time to let their plan take effect. They likely have one more major shot.

jaxlongtimer

  • Sr. Member
  • ****
  • Posts: 459
Which private equity firm has ran JC Penney into the ground?

Point noted and clarification called for.

JCPenney's management was controlled by a hedge fund at one point but the company was already highly leveraged, following the the private equity model.  Thus, while remaining a publicly held company, it differed from most of its private equity competitors in form, but not in substance.  Here is a good overview of the role of private equity in the retail sector, comparing JCPenney to others taken private: https://prospect.org/coronavirus/unsanitized-jcpenney-follows-private-equity-sinks-into-bankruptcy/

Quote
... you can’t cherry-pick one company and absolve the failed PE business model. According to the Wall Street Journal, 27 of the 38 retailers with the “weakest credit profiles” are private equity-owned. The incredible debt burden placed on these firms made them inflexible amid industry changes. And that was JCPenney’s problem too; its downfall mirrored the tell-tale signs of a private equity portfolio company....

Steve

  • The Jaxson
  • Hero Member
  • *****
  • Posts: 3424

sandyshoes

  • Sr. Member
  • ****
  • Posts: 420
I noticed that this thread's original poster's post is gone...Florida Power and Light's posts can be a little challenging to follow, but he/she has a voice and is using it to the best of their ability.

Steve

  • The Jaxson
  • Hero Member
  • *****
  • Posts: 3424
Re: J.C. Penney to file for bankruptcy as soon as next week
« Reply #36 on: May 19, 2020, 10:17:39 AM »
I noticed that this thread's original poster's post is gone...Florida Power and Light's posts can be a little challenging to follow, but he/she has a voice and is using it to the best of their ability.

There were two threads - merged into one.

Megabox

  • Full Member
  • ***
  • Posts: 100
Re: J.C. Penney to file for bankruptcy as soon as next week
« Reply #37 on: June 04, 2020, 07:17:05 PM »
They just made a list of store closings this summer. The JCPenney's at Regency Square Mall will close. The ones at the Avenues and Orange Park Mall will remain.

thelakelander

  • The Jaxson
  • Hero Member
  • *****
  • Posts: 31003
    • Modern Cities
Re: J.C. Penney to file for bankruptcy as soon as next week
« Reply #38 on: June 04, 2020, 08:28:13 PM »
The nail in the coffin was already in place for Regency but you can now toss the dirt on it.
"A man who views the world the same at 50 as he did at 20 has wasted 30 years of his life.” - Muhammad Ali

Charles Hunter

  • Hero Member
  • *****
  • Posts: 3006
Re: J.C. Penney to file for bankruptcy as soon as next week
« Reply #39 on: June 04, 2020, 08:32:50 PM »
Maybe they can put bunk beds all through Regency Mall to house the people coming to Lenny's RNC.