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WSJ: Penney's 'Broken Business' Aims to Avoid Sears' Fate

WSJ: Penney's 'Broken Business' Aims to Avoid Sears' Fate

By    |   Tuesday, 22 January 2019 11:03 AM

Embattled retailer J.C. Penney Co. reportedly is battling declining sales and executive vacancies and it desperately tries to avoid the fate of rival Sears Holdings Corp.

Penney earlier this month announced plans to close three stores this spring and said it would assess locations over the next few months that may not meet the required financial targets or represent a market opportunity, Reuters reported. Penney, which currently operates 860 stores, had announced closure of 138 stores in February 2017.

The Plano, Texas-based company also recently reported a 3.5 percent fall in adjusted comparable store sales for the nine-week period ended Jan. 5, indicating a fall in overall comparable sales for the holiday quarter.

Fitch Ratings Inc. also recently downgraded its debt one notch closer to junk.

“Penney is a broken business,” Mark Cohen, director of retail studies at Columbia Business School, told The Wall Street Journal. “They are looking at a very problematic 2019. It’s the mistakes of the past coming home to roost,” he said.

Penney’s results underscored the brick-and-mortar retail industry’s struggles to win back shoppers who have been increasingly shifting towards online retailers such as Amazon.com (AMZN.O) and fast-fashion brands.

A handful of major U.S. retail names have collapsed in the past two years, including Sears Holdings Corp (SHLDQ.PK), which is now considering a revised takeover bid from billionaire Chairman Edward Lampert temporarily staving off a liquidation.

Penney and other retailers, on the other hand, have slashed jobs and closed hundreds of stores.

Analysts have noted that retailers like Penney, Kohl’s Corp (KSS.N), Macy’s Inc (M.N) and Walmart Inc (WMT.N) could benefit from Sears shuttering stores.

The latest store closures come as Chief Executive Officer Jill Soltau, who took office in October, looks to turn around the troubled company that has seen sales declining in the past two years.

Penney recently disclosed it has failed to restock any of the other open positions in its executive ranks, the Journal noted. Penney said it is searching for a chief merchant, chief customer officer and head of planning and allocation. Its principal accounting officer will leave March 31, and it is looking for a successor to its chief financial officer who left in October.

“There is uncertainty around the company’s strategy given the changes in the top ranks,” said Monica Aggarwal, a Fitch managing director. “We need more clarity in terms of how they plan to position themselves.”

Penney’s shares (JCP) lost 67 percent in 2018.

A Penney spokeswoman declined to comment for the WSJ article.

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Embattled retailer J.C. Penney Co. reportedly is battling declining sales and executive vacancies and it desperately tries to avoid the fate of rival Sears Holdings Corp.
penney, sears, fate, retailer
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2019-03-22
Tuesday, 22 January 2019 11:03 AM
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