Sears or JCP who will die first?

[Garin]

What Recovery? Sears And J.C. Penney Are DYING
By Michael Snyder, on January 16th, 2014


Two of the largest retailers in America are steamrolling toward bankruptcy. Sears and J.C. Penney are both losing hundreds of millions of dollars each quarter, and both of them appear to be caught in the grip of a death spiral from which it will be impossible to escape. Once upon a time, Sears was actually the largest retailer in the United States, and even today Sears and J.C. Penney are "anchor stores" in malls all over the country. When I was growing up, my mother would take me to the mall when it was time to go clothes shopping, and there were usually just two options: Sears or J.C. Penney. When I got older, I actually worked for Sears for a little while. At the time, nobody would have ever imagined that Sears or J.C. Penney could go out of business someday. But that is precisely what is happening. They are both shutting down unprofitable stores and laying off employees in a desperate attempt to avoid bankruptcy, but everyone knows that they are just delaying the inevitable. These two great retail giants are dying, and they certainly won't be the last to fall. This is just the beginning.

The Death Of Sears

Sales have declined at Sears for 27 quarters in a row, and the legendary retailer has been closing hundreds of stores and selling off property in a frantic attempt to turn things around.

Unfortunately for Sears, it is not working. In fact, Sears has announced that it expects to lose "between $250 million to $360 million" for the quarter that will end on February 1st.

Things have gotten so bad that Sears is even making commercials that openly acknowledge how badly it is struggling. For example, consider the following bit of dialogue from a recent Sears television commercial featuring two young women...

"Wait, the movie theater is on the other side," the passenger says.

"But Sears always has parking!" the driver responds.

Sears always has parking???

Of course the unspoken admission is that Sears always has parking because nobody shops there anymore.

I have posted video of the commercial below...



A couple of months ago I walked into a Sears store in the middle of the week and it was like a ghost town. A few associates were milling around here and there having private discussions among themselves, but other than that it was eerily quiet.

You can find 18 incredibly depressing photographs which do a great job of illustrating why Sears is steadily dying right here. This was once one of America's greatest companies, but soon it will be dead.

The Death Of J.C. Penney

J.C. Penny has been a dead man walking for a long time. In some ways, it is in even worse shape than Sears.

If you can believe it, J.C. Penney actually lost 586 million dollars during the second quarter of 2013 alone.

How in the world do you lose 586 million dollars in three months?

Are they paying employees to flush giant piles of cash down the toilets?

This week J.C. Penney announced that it is eliminating 2,000 jobs and closing 33 stores. The following is a list of the store closings that was released to the public...

The CEO of J.C. Penney says that these closures were necessary for the future of the company...

"As we continue to progress toward long-term profitable growth, it is necessary to reexamine the financial performance of our store portfolio and adjust our national footprint accordingly," CEO Myron Ullman said in a news release.

Actually, his statement would be a lot more accurate if he replaced "continue to progress toward long-term profitable growth" with " prepare for bankruptcy".

It would be hard to overstate how much of a disaster 2013 was for J.C. Penney. The following is an excerpt from a recent CNN article...

It's been a brutal year for J.C. Penney, its stock falling over 60% in the past 12 months. The company has been losing hundreds of millions of dollars per quarter, and is in the midst of another turnaround effort after ousting former Apple executive Ron Johnson last year.

Overall, shares of J.C. Penney have fallen by an astounding 84 percent since February 2012. And keep in mind that this decline has happened during one of the greatest stock market rallies of all-time.

For now, J.C. Penney will continue to try to desperately raise more cash from investors that are foolish enough to give it to them, but all that is really accomplishing is just delaying the inevitable.

If you would like to see some photos that graphically illustrate why J.C. Penney is falling apart, you can find some right here.

And of course Sears and J.C. Penney are not the only large retailers that have fallen on hard times. This week the CEO of Best Buy admitted that sales declined at his chain during the holiday season...

Best Buy shares skid on Thursday after the retailer said total revenue and sales at its established U.S stores fell in the all-important holiday season due to intense discounting by rivals, supply constraints for key products and weak traffic in December.

In the immediate aftermath of that announcement, Best Buy stock was down more than 30 percent in pre-market trading.

And Macy's just announced that it is laying off 2,500 employees in an attempt to move in a more profitable direction.

So why is all of this happening?

Aren't we supposed to be in the midst of an "economic recovery"?

That is what the Obama administration and the mainstream media keep telling us, but it is simply not true.

In fact, a new Gallup survey has found that the number of Americans that are "financially worse off" than a year ago is significantly higher than the number of Americans that say that they are "financially better off" than a year ago...

More Americans, 42%, say they are financially worse off now than they were a year ago, reversing the lower levels found over the past two years. Just more than a third of Americans say their financial situation has improved from a year ago.

That is why these stores are dying.

Things continue to get even worse for the middle class.

But a lot of people out there will continue to deny what is happening right in front of their eyes. They are kind of like that woman over in California who was conned out of half a million dollars by a Nigerian online dating scam. They will never admit the truth until it is far too late to do anything about it.

[Easy180]

I would say Sears will die first since I see actual living human beings walking into Penney's

[bluedogok]

My wife shops at Penney's again after the Apple person was fired, while he was there she started going to Kohl's more.

[Snowman]

Which goes first is hard to say but I from articles I have read Penney's seems more sure to die, Sears though did so much damage to their brand it will be impressive if they can ever make a comeback.

[blangtang]

About a year ago I stopped in the JCP at Penn Square, and most of the floor space was just open areas with carpeting. I think people stop in their to use the toilet since there's not much of a line.

How about Radio Shack? I wonder who buys from them these days.

[Pete]

Almost all the old department stores are already dead; Dillard's and Macy's are about the only ones still standing and they have bought out a bunch of other failing chains themselves. Some of the higher end versions are doing okay, like Nordstrom, but of course many in that niche are long gone as well.

Like large malls, it's merely a concept which time has mostly past. In their place are scores of big-box discount stores and on-line options.

In the case of Sears, the only thing that has kept them going this long was the sell off of other big assets, like Allstate Insurance, Dean Witter and Coldwell Banker Real Estate. They even sold Sears Tower! People probably don't even remember when Sears had a big financial empire that stretched well beyond it's retail arm.


If and when Sears and Penney's die, I doubt too many people will miss them.

[Jim Kyle]

Is Federated still using the Dillard's brand name out west? Here in OKC the name changed first to Foley's, then to Macy's. All, of course, are simply parts of the Federated empire so far as I can determine...

And is the May company still the biggest department store group in the L.A. area?

[SoonerDave]

I have thought for years that I could drive by the old, nasty Sears on SW 44th and Western on any given day, and there was no worse than a coin flip's chance the thing would, out of the blue, be shuttered and gone from the earth. It hasn't happened yet, but I still would never bet against it. That's a nasty, nasty store that holds for me only hollow, fleeting memories of the vibrant retail atmosphere that, believe it or not, once reigned there. Sears was almost as big and routine a part of my family's shopping efforts as TG&Y. A week without a trip to the Sears catalog desk to pick up an order was an exception. Sears used have a candy counter with hot, roasted peanuts and popcorn, the aroma of which would flow through the store. On the south end was a big coffee shop, and to the west were the hardware and sporting goods where they always had the current incarnation of Pong on display and for sale - and I never lost a game . They sold furniture, console TV's, VCR's, you name it, and Sears had it.

Then things, well, changed. Their namesake brands started being built by no-name mass manufacturers overseas, and the quality that had made Kenmore and Craftsman household names went down the toilet with it. The stores fell in to disrepair. They had no marketing direction, floating on the momentum of "well, we're Sears, we'll always be relevant," until they weren't. The 44th street store is a smelly, slipshot place that belies the industrious retailer Sears once was, and resembles it these days in name only. Marketing, business plan, advertising, whatever it was, Sears has failed in nearly every respect. And it's sad.

JCPenny wasn't nearly as critical a retailer for us as Sears, but its clearly a rudderless company that is grasping for direction and air. THe Apple misstep was a gargantuan failure, right down to the logo change. And I think Pete is more or less right in the general notion that both stores are examples of a bygone era in US retail - the big box, multidepartment store that serves everyone. And its precisely the reason I loathe the JCPenney store in Moore - its so freaking huge you have to pack a stinking lunch to get from the front door back to whatever department you want. And the perpetual reinvention of the company has been, well, exhausting. I can't see them continuing to hemorrhage cash before someone sees the writing on the wall and calls it a day - the recent closure of 33 stores and layoff of 2,000+ employees is probably only the beginning in much the same way the early shutdowns were harbingers of bad things to come for Blockbuster over the last few years as their market disappeared from beneath them.

Who will fail first? I guess with KMart to prop them up, Sears might endure longer merely through the sheer force of will of its owner. But JCPenney has hardly much better future, seems to me. There's hardly much future for either. As for who will last? Who knows. As likely to end up a photo-finish to the bankruptcy line as either one hitting it first.

[Pete]

Is Federated still using the Dillard's brand name out west? Here in OKC the name changed first to Foley's, then to Macy's. All, of course, are simply parts of the Federated empire so far as I can determine...

And is the May company still the biggest department store group in the L.A. area?

Federated is now Macy's Inc., which operates Macy's and Bloomingdales.

May Co. merged with Macy's some time ago.


We don't have Dillard's in California, just Macy's, Bloomies, Nordstrom and a few Nieman's and Saks. And of course, the remain Sears and Penney locations.

More and more, Target is going into malls out here.

[Pete]

Sears was almost as big and routine a part of my family's shopping efforts as TG&Y. A week without a trip to the Sears catalog desk to pick up an order was an exception. Sears used have a candy counter with hot, roasted peanuts and popcorn, the aroma of which would flow through the store. On the south end was a big coffee shop, and to the west were the hardware and sporting goods where they always had the current incarnation of Pong on display and for sale - and I never lost a game . They sold furniture, console TV's, VCR's, you name it, and Sears had it.

When I was very young, it was the same for my family with the Sears at 23rd & Penn.

I think we bought all our appliances and hardware there in the 60's.

[poe]

I've had pretty good luck with JCP; bought quite a bit of decent items there since last summer, and they had good sales during Christmas. I got a Cuisinart coffee maker for $20 cheaper than at Kohl's. Sears, on the other hand, I wouldn't miss. For awhile, I got my car serviced at Sears, but the staff always seemed to hate their jobs and usually argued with each other in the presence of customers, so I decided to go somewhere else. The Sears store in Amarillo seems to always have activity in the tool section, but that's about it.

[Soonerman]

Well folks, Sears in Shawnee is going out of business.

Sears store in Shawnee closing - News - The Shawnee News-Star - Shawnee, OK

[bchris02]

Sears, definitely. It's a relic of the past along the lines of Montgomery Ward. I disagree about department stores going the way of the dodo though. High-end ones like Nordstrom, Saks, and Neiman Marcus are doing well and I am pretty sure Macy's and Dillard's are doing well also. Another one that is doing pretty well is Belk, which doesn't have a presence in OKC but is every bit as high-profile as Macy's and Dillard's in malls in the Southeastern US.

[mugofbeer]

I think if Sears would just drop clothing and concentrate on hardware and appliances and the contract their store size, they might make it. Turn into an Ace-like store

[zookeeper]

Sears, definitely. It's a relic of the past along the lines of Montgomery Ward. I disagree about department stores going the way of the dodo though. High-end ones like Nordstrom, Saks, and Neiman Marcus are doing well and I am pretty sure Macy's and Dillard's are doing well also. Another one that is doing pretty well is Belk, which doesn't have a presence in OKC but is every bit as high-profile as Macy's and Dillard's in malls in the Southeastern US.

It's not just high-end stores that are thriving. You left out the largest department store chain in the country. Kohl's is sitting mighty pretty.

[gjl]

I always wondered how the Sears on 44th and Western stayed in business. With the closing of the Sears at Quail, that is where I have to go to replace broken tools now. Seems there is never more than about 20 cars in the parking lot. I asked one of the associates in the tool department how they keep the doors open with so few customers and he said just the volume of tools and tool boxes they sell to Tinker was enough to keep that store open.

And about Radio Shack. It's been so long since I've been in one of those stores, do you still have to give them your phone number just to buy a battery? I remember when you used to get a free battery every month there.

[stick47]

Never saw a Craftsman tool chest or one of their tools at TAFB when I worked there. When the shops went to ISO 9000 specs a number of years ago KP Supply had the tool kitting contract for the East side of the base (3001 Bldg & the South 40 area) I doubt the Sears guy knew what he was talking about.

[Oh GAWD the Smell!]

I love Sears. I go there quite a bit. Nobody, and I mean NOBODY can touch their tool supply. Harbor Freight, Steve's Wholesale, etc. are great...But they're 90% Chinese junk. If Sears' tools are made in China, they're at least not cheap junk

They also have a great appliance selection that doesn't have many rivals either.


I buy stuff from them all the time. Love it. It's sad to see them in such decline.

[Bill Robertson]

I think if Sears would just drop clothing and concentrate on hardware and appliances and the contract their store size, they might make it. Turn into an Ace-like store

I think they might be doing just that. There is an almost completed building just north of the old theater building on the west side of Quail with a sign "Sears Coming Soon". It's just about the size of an Ace.

[Garin]

If they were to both fall, we would be looking at another 425k unemployed people looking and competing in the job market. I like Sears for their tools and appliances and also think if they would reinvent themselves they would have a chance to make it, JCP on the other hand is getting their clocks cleaned by the Kohl's stores. IMO JCP will leave the market first.

[bchris02]

I think they might be doing just that. There is an almost completed building just north of the old theater building on the west side of Quail with a sign "Sears Coming Soon". It's just about the size of an Ace.

I agree. Their new "Hometown" concept - which pretty much focuses on hardware, tools, and appliances, is the future for that company. The days of buying clothing and electronics from Sears are long gone. The reduced store size will be a massive cost reduction for the company and they can focus on what actually makes them money.

[gjl]

Sears is partnered with Kmart and they are multinational so I doubt they will just go away completely.

[bchris02]

Sears is partnered with Kmart and they are multinational so I doubt they will just go away completely.

K-Marts are all but gone in this region of the country, but that's probably because they can't compete with Wal-Mart. Even in other regions without as much Wal-Mart dominance, K-Mart is usually such a ghost town I wonder how they are still in business.

[gjl]

Wiki says Sears Holdings is still the 10th largest retailer by annual revenues in the US and that Kmart is the third largest discount retailer in the world behind Walmart and Target.

[SoonerDave]

I love Sears. I go there quite a bit. Nobody, and I mean NOBODY can touch their tool supply. Harbor Freight, Steve's Wholesale, etc. are great...But they're 90% Chinese junk. If Sears' tools are made in China, they're at least not cheap junk

They also have a great appliance selection that doesn't have many rivals either.

I buy stuff from them all the time. Love it. It's sad to see them in such decline.

Steve's Wholesale has better quality stuff than Harbor Frieght, but I'll agree some of it isn't exactly first-line quality. However, SW has a much broader variety of tools than the others, certainly moreso than Sears.

Sad thing is Sears let its Crastsman power tool line go down the drain years ago. Now, older Craftsman tools from much any time from the mid 70's and earlier that show up at garage sales or estate sales are worth a small mint, while the later ones aren't worth much of anything. Read in the last few years about some cabinet/woodworking guys who bought a higher-end Craftsman table (or was it a cabinet?) saw, and in their review they were having trouble making repeatable, accurate cuts with it, and when they dove into finding out why it was due to a maze of malleable, cheap plastic bushings and fasteners within the adjustment mechanisms that kept the saw cheap, but unreliable. You can buy Craftsman-labeled hand tools at Ace Hardware now, for Heaven's sake, so you can tell what Sears think of the brand. Its purely a name riding on the inertia of its erstwhile reputation as they wring the last penny of earned value from it. I took my broken Crafstman ratchet in for my "lifetime warranty" replacement and it had a wonderful (not) plastic ratcheting mechanism and reverser switch that feels like it would break into pieces if any real force were used with it.

Their appliance selection is nothing compared to what I can see at Lowe's, Home Depot, or heck, even Hahn's Appliances here in OKC. Kenmore use to be the Craftsman of home appliances, but they either went in the toilet or just became yet another OEM for the remaining handful of actual appliance manufacturers. Whirlpool has made most of Sears fridges and, I think, washers for some years now. When I was shopping for an upright freezer unit many years ago, I went to Sears (just out habit), saw a particular brand and found out it was the Kenmore private label for a particular Whirlpool model; I went to Lowe's, found the exact model number, identical in all respects for something like $100 cheaper (or thereabouts, may actually have been more...its been a while) and the Lowe's guy bent over backwards to get it delivered to my house the next day. That was the last time I set foot in Sears with any notion of buying appliances. I contrast that with the Lady Kenmore refrigerator my mom bought from Sears in, I think, 1963, and still has running to this very day, or her Kenmore sewing machine bought in very much the same time frame.

Sears is Sears in name only. Sadly, they're not the only one to have met the same fate....lots of former great US sales and manufacturing names are now merely shell, licensed uses of the name wrapping second-tier quality merchandise. Kinda pitiful.