Buying a House: Houston vs Dallas (Kress: bankrupt, deed, closing)

[citidata18]

Originally Posted by ParaguaneroSwag

JC Penny in no way shape or form is better off than other large chains. They had to close its headquarters. While it could come out of it, they won't be the same company as used to be.

I didn't say JCP will be the same company it used to be.

JC Penney had a ton of toxic debt to pay off from their overexpansion in the 1990s and 2000s, which is why they had to close their HQ. But bankruptcy gave them the opportunity to clean that up and put it behind them. Other retailers in tenuous fiscal positions haven't been so lucky. Plus, it's not like majority of JCP's stores are losing money.

I think JC Penney will be somewhat similar to GM where despite losing significant market share and scale since its bankruptcy, is still making money and remains a big player in its industry.

[ParaguaneroSwag]

Originally Posted by citidata18

I didn't say JCP will be the same company it used to be.

JC Penney had a ton of toxic debt to pay off from their overexpansion in the 1990s and 2000s, which is why they had to close their HQ. But bankruptcy gave them the opportunity to clean that up and put it behind them. Other retailers in tenuous fiscal positions haven't been so lucky. Plus, it's not like majority of JCP's stores are losing money.

I think JC Penney will be somewhat similar to GM where despite losing significant market share and scale since its bankruptcy, is still making money and remains a big player in its industry.

You realize JC Penny got acquired right. Which doesn't always mean the company will die or will close its hq (though in this case, it did end up meaning that). When these types of recessions hit, the companies that last through it end up benefitting from the less competition in the end. JC Penny isn't one of those. But Neiman Marcus is.

[citidata18]

Originally Posted by ParaguaneroSwag

You realize JC Penny got acquired right.

Not sure what that has to do with anything.

JC Penney had a debt problem. Now that the debt problem has been cleaned up, they're in a much healthier position than other retailers that are still saddled with their debt.

[ParaguaneroSwag]

Originally Posted by citidata18

Not sure what that has to do with anything.

How doesn't it? A Fortune 500 company doesn't willingly get acquired and close their headquarters just because. If JC Penny has a bright future, it'll be out of attachment of their new parent.

[citidata18]

Originally Posted by ParaguaneroSwag

How doesn't it?

If the fundamental operations of JC Penney was the problem, its assets would have been liquidated (ala Toys R Us). That didn't happen.

BTW, it looks like Belk is frantically trying to avoid bankruptcy now. JC Penney's definitely looking good compared to them.

[ParaguaneroSwag]

Originally Posted by citidata18

If the fundamental operations of JC Penney was the problem, its assets would have been liquidated (ala Toys R Us). That didn't happen.

BTW, it looks like Belk is frantically trying to avoid bankruptcy now. JC Penney's definitely looking good compared to them.

JC Penny's fundamental operations aren't their problems. The retail world in general got hit hard, and it took JC Penny down with it. The few that are benefitting are outdoors stores, dollar stores and some others.

[citidata18]

Originally Posted by ParaguaneroSwag

JC Penny's fundamental operations aren't their problems. The retail world in general got hit hard, and it took JC Penny down with it. The few that are benefitting are outdoors stores, dollar stores and some others.

The specific type of retailers you mention don't have the toxic level of debt that JC Penney had.

JC Penney no longer has that debt weighing them down either, which is why say they're in a better position than retailers like Belk (and plenty of other in the same club) that are dealing with similar financial problems but have been kicking the can down the road.

[LocalPlanner]

Originally Posted by citidata18

The specific type of retailers you mention don't have the toxic level of debt that JC Penney had.

JC Penney no longer has that debt weighing them down either, which is why say they're in a better position than retailers like Belk (and plenty of other in the same club) that are dealing with similar financial problems but have been kicking the can down the road.

No traditional department store primarily catering to the middle and working classes (like JC Penney or Sears) is considered to have a bright future period. Walmart, Target, Ross, TJ Maxx, Marshalls, Home Goods, and other big box / discounters have eaten their lunch, along with Amazon and online shopping. Why pay the markups at department stores (which are the entire basis of their revenue model) when (1) you know stuff will go on sale and be marked way down, which destroys the stores' profits, and (2) the whole service and selection on offer, which supposedly justified those premiums, has been whittled down to nothing? Consumers are responding logically, especially since the middle class has been shrinking anyway.

I'm not discounting the debt factor for many retail chains (thank you, private equity), but for department stores there is increasing lack of justification for their business model.

[Mr. Clutch]

Didn't JCPenney have operational issues before Covid? In other words, is their debt their only major problem? I would think demand and declining revenue would have at least something to do with it. I am not a fashion guy by any stretch of the imagination, but I do shop from time to time and I cannot remember the last time I've been inside a JCPenney. It's probably been 10-15 years.

But maybe they are secretly popular?

[LocalPlanner]

Originally Posted by Mr. Clutch

Didn't JCPenney have operational issues before Covid? In other words, is their debt their only major problem? I would think demand and declining revenue would have at least something to do with it. I am not a fashion guy by any stretch of the imagination, but I do shop from time to time and I cannot remember the last time I've been inside a JCPenney. It's probably been 10-15 years.

But maybe they are secretly popular?

You are correct, their business model has been in trouble for quite a number of years. One executive was brought in years ago (can't remember exactly when and too lazy to look it up, but probably at least 8 years ago) who tried to do "everyday low prices" (like Walmart), but shoppers rebelled - they wanted the old model where you have "everyday markups" then put stuff on sale at steep discounts Probably the customers for whom "everyday low prices" might have resonated had already permanently switched to Walmart / Target / Ross / TJ Maxx / Marshalls.

This failed scheme was a disaster (not that JC Penney was starting from a good position - that's why they had a new CEO to begin with). It put the chain even further in the hole financially. While that CEO left, and the newer CEOs restored the old model, the downward trend never really stopped.