Mike Campbell is the name of a character in Ernest Hemingway’s novel, The Sun Also Rises, who is asked about how he went bankrupt. He offers the famous yet solemn line, “Two ways. Gradually, then suddenly.”
JC Penney’s passing reflects just that. It was a crawling retail shipwreck that was on the brink for years, and then the pandemic pushed it over into bankruptcy. The saga of JC Penney is symbolic of the pandemic era.
JC Penney’s start rolls back to 1902 with its first outlet in Kemmerer, Wyoming. It grew to become a famous name, a prominent nationwide retailer for shopping, and a well-known anchor at big malls. JC Penney was the go-to family retailer back in the 80s because they sold a broad range of products which ranged from fashion to homewares.
However, slowly and gradually, the retail chain started to witness their lack of touch with their core customers. By the latter half of the 90s, the company became an artifact of a bygone retail era.
The company overcame the Great Depression, World Wars, and the financial crisis yet could not combat the amalgamation of competitors like Target, Walmart, online behemoth Amazon and the forced shutdowns of businesses due to the virus. Covid-19 was the reason that cracked the company’s back after being a prominent player for 118 years in the industry.
After being a prominent player in the business for more than a century, JC Penney filed for bankruptcy protection. It paid out millions to top executives just before it happened, numerous workers lost their jobs, and shareholders witnessed their investments in the company’s collapse. In one of the filings, it was revealed that then-CEO, JC Penny, Jill Soltau got a $4.5 million bonus.
When that was the case, mall owners Simon Property Groups and Brookfield Asset Management acquired the relics of JC Penney. They did it majorly to safeguard their interests by not having empty malls. With this, it was beneficial to them to buy a popular yet worn retail chain at a discount. That could also become an upside once the general mass resumes shopping offline as the pandemic ends.
Numerous stockholders of JC Penney, loyal employees, and retirees were fuming over bonus payments to the corporates and the fire sale of the company. They claim that their interests were ignored by the bankruptcy system.
They argued intensely that professional, big-money institutions and Wall Street-type players imposed an unmatched advantage in the proceedings against relatively small shareholders, who are unfamiliar with the system of bankruptcy hearings.
Employees lost jobs, and shareholders witnessed titanic losses in their stock holdings. In the coming years, it will be interesting to see if this outdated brand can still rejuvenate and bring back a happier ending to this sad story.