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| J.C. Penney, 118-Year-Old Department Store, Files for Bankruptcy | J.C. Penney, 118-Year-Old Department Store, Files for Bankruptcy |
| (3 days later) | |
| J.C. Penney, with its budget-friendly clothing for families and reliable home furnishings, was for years a cornerstone of American malls and an undeniable success story. What started as a humble dry goods store in Wyoming in 1902 was a century later a national chain with a household name and more than 1,000 locations. | J.C. Penney, with its budget-friendly clothing for families and reliable home furnishings, was for years a cornerstone of American malls and an undeniable success story. What started as a humble dry goods store in Wyoming in 1902 was a century later a national chain with a household name and more than 1,000 locations. |
| But on Friday, the company filed for bankruptcy protection after a prolonged decline over the past 20 years, becoming the latest and largest retailer to fall during the coronavirus pandemic, which has devastated the industry. The chain has more than 800 stores and nearly 85,000 employees. | But on Friday, the company filed for bankruptcy protection after a prolonged decline over the past 20 years, becoming the latest and largest retailer to fall during the coronavirus pandemic, which has devastated the industry. The chain has more than 800 stores and nearly 85,000 employees. |
| Its collapse follows other retail bankruptcies this month including J. Crew, the Neiman Marcus Group and the designer men’s clothing brand John Varvatos. But J.C. Penney represents the biggest casualty by far based on the number of locations, with stores that are anchors at many of the nation’s malls. | Its collapse follows other retail bankruptcies this month including J. Crew, the Neiman Marcus Group and the designer men’s clothing brand John Varvatos. But J.C. Penney represents the biggest casualty by far based on the number of locations, with stores that are anchors at many of the nation’s malls. |
| J.C. Penney said it filed for Chapter 11 protection from its creditors in federal bankruptcy court for the Southern District of Texas, adding that it had $500 million in cash on hand and had received commitments for $900 million in financing to use during the bankruptcy process. The company said it had struck a deal with lenders that would reduce several billion dollars of its debt and it would explore a sale. It also said it planned to close stores, but specific locations and timing would be disclosed in coming weeks. | J.C. Penney said it filed for Chapter 11 protection from its creditors in federal bankruptcy court for the Southern District of Texas, adding that it had $500 million in cash on hand and had received commitments for $900 million in financing to use during the bankruptcy process. The company said it had struck a deal with lenders that would reduce several billion dollars of its debt and it would explore a sale. It also said it planned to close stores, but specific locations and timing would be disclosed in coming weeks. |
| Jill Soltau, J.C. Penney’s chief executive, said that the retailer expected to emerge from “Chapter 11 and this pandemic as a stronger retailer.” | Jill Soltau, J.C. Penney’s chief executive, said that the retailer expected to emerge from “Chapter 11 and this pandemic as a stronger retailer.” |
| The filing was expected after J.C. Penney failed to make an interest payment on its debt in April to “maximize financial flexibility,” and then skipped another payment last week. The stock of the chain, based in Plano, Texas, has been trading below $1 per share for most of this year. | The filing was expected after J.C. Penney failed to make an interest payment on its debt in April to “maximize financial flexibility,” and then skipped another payment last week. The stock of the chain, based in Plano, Texas, has been trading below $1 per share for most of this year. |
| The bankruptcy represents the fall of an American institution that traces its roots to Kemmerer, Wyo., where its founder, James Cash Penney Jr., invested in a dry-goods store called the Golden Rule. He soon renamed it J.C. Penney, but was devoted to the notion of the Golden Rule, particularly in how the company treated its workers, and shared its profits with staff from its early days. | The bankruptcy represents the fall of an American institution that traces its roots to Kemmerer, Wyo., where its founder, James Cash Penney Jr., invested in a dry-goods store called the Golden Rule. He soon renamed it J.C. Penney, but was devoted to the notion of the Golden Rule, particularly in how the company treated its workers, and shared its profits with staff from its early days. |
| By the 1990s, the company was viewed as a respectable shopping destination that was more affordable than Macy’s but more upscale than discount outlets. | By the 1990s, the company was viewed as a respectable shopping destination that was more affordable than Macy’s but more upscale than discount outlets. |
| “It was synonymous with value,” said Stacey Widlitz, president of SW Retail Advisors, an independent research firm. | “It was synonymous with value,” said Stacey Widlitz, president of SW Retail Advisors, an independent research firm. |
| Most department store chains have been in a long period of decline, and the massive footprint of J.C. Penney at mid-tier malls has been especially challenging. | Most department store chains have been in a long period of decline, and the massive footprint of J.C. Penney at mid-tier malls has been especially challenging. |
| But J.C. Penney’s demise was accelerated in the past decade by the involvement of William A. Ackman, the hedge fund manager, and Ron Johnson, the former retail chief at Apple, who were behind one of the most disastrous retail turnaround attempts in recent history. | But J.C. Penney’s demise was accelerated in the past decade by the involvement of William A. Ackman, the hedge fund manager, and Ron Johnson, the former retail chief at Apple, who were behind one of the most disastrous retail turnaround attempts in recent history. |
| Mr. Ackman, an activist investor and chief executive of Pershing Square Capital Management, bought a major stake in J.C. Penney in 2010 and subsequently joined its board, seeing an opportunity at the retailer, which was losing ground to rivals like Kohl’s and Macy’s. | Mr. Ackman, an activist investor and chief executive of Pershing Square Capital Management, bought a major stake in J.C. Penney in 2010 and subsequently joined its board, seeing an opportunity at the retailer, which was losing ground to rivals like Kohl’s and Macy’s. |
| He recruited Mr. Johnson, who joined in late 2011 and planned to transform J.C. Penney’s stores into collections of boutiques with a “town square," banish nonstop promotions and strike up partnerships with higher-end designers like Nanette Lepore. | He recruited Mr. Johnson, who joined in late 2011 and planned to transform J.C. Penney’s stores into collections of boutiques with a “town square," banish nonstop promotions and strike up partnerships with higher-end designers like Nanette Lepore. |
| But Mr. Johnson’s efforts alienated J.C. Penney’s core customers, led to sales and traffic declines and created internal rifts. He was ousted after 17 months in April 2013. In one year, J.C. Penney had seen $4.3 billion, or 25 percent, of its annual sales wiped out. | But Mr. Johnson’s efforts alienated J.C. Penney’s core customers, led to sales and traffic declines and created internal rifts. He was ousted after 17 months in April 2013. In one year, J.C. Penney had seen $4.3 billion, or 25 percent, of its annual sales wiped out. |
| “It is not easy to get a customer back but it is easy to lose one,’’ said Christina Boni, senior credit officer at Moody’s Investors Service. “They made some strategic choices that in hindsight were not the best to make.” | “It is not easy to get a customer back but it is easy to lose one,’’ said Christina Boni, senior credit officer at Moody’s Investors Service. “They made some strategic choices that in hindsight were not the best to make.” |
| J.C. Penney has cycled through chief executives since then, but the downward trend has persisted. Even with a 14-year partnership with Sephora, the cosmetics chain with shops inside hundreds of J.C. Penney locations, it has found it difficult to appeal to younger customers. | J.C. Penney has cycled through chief executives since then, but the downward trend has persisted. Even with a 14-year partnership with Sephora, the cosmetics chain with shops inside hundreds of J.C. Penney locations, it has found it difficult to appeal to younger customers. |
| “They’re not luxury, they’re not as cheap as Walmart and T.J. Maxx, they don’t have the niche stuff at specialty retailers,” said Barbara E. Kahn, a marketing professor at the University of Pennsylvania’s Wharton School. “It’s stuck in the middle with no differentiation.” | “They’re not luxury, they’re not as cheap as Walmart and T.J. Maxx, they don’t have the niche stuff at specialty retailers,” said Barbara E. Kahn, a marketing professor at the University of Pennsylvania’s Wharton School. “It’s stuck in the middle with no differentiation.” |
| The company had been making progress in recent months toward slimming down its inventory and improving its merchandise presentation, Ms. Boni said. But J.C. Penney was also struggling with a debt load more than three times that of other large mall-based retailers, giving it less financial flexibility to invest in online initiatives and other efforts to win back customers. | The company had been making progress in recent months toward slimming down its inventory and improving its merchandise presentation, Ms. Boni said. But J.C. Penney was also struggling with a debt load more than three times that of other large mall-based retailers, giving it less financial flexibility to invest in online initiatives and other efforts to win back customers. |
| Updated June 12, 2020 | |
| Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks. | |
| So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement. | So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement. |
| A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study. | A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study. |
| The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April. | The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April. |
| Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission. | Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission. |
| Exercise researchers and physicians have some blunt advice for those of us aiming to return to regular exercise now: Start slowly and then rev up your workouts, also slowly. American adults tended to be about 12 percent less active after the stay-at-home mandates began in March than they were in January. But there are steps you can take to ease your way back into regular exercise safely. First, “start at no more than 50 percent of the exercise you were doing before Covid,” says Dr. Monica Rho, the chief of musculoskeletal medicine at the Shirley Ryan AbilityLab in Chicago. Thread in some preparatory squats, too, she advises. “When you haven’t been exercising, you lose muscle mass.” Expect some muscle twinges after these preliminary, post-lockdown sessions, especially a day or two later. But sudden or increasing pain during exercise is a clarion call to stop and return home. | Exercise researchers and physicians have some blunt advice for those of us aiming to return to regular exercise now: Start slowly and then rev up your workouts, also slowly. American adults tended to be about 12 percent less active after the stay-at-home mandates began in March than they were in January. But there are steps you can take to ease your way back into regular exercise safely. First, “start at no more than 50 percent of the exercise you were doing before Covid,” says Dr. Monica Rho, the chief of musculoskeletal medicine at the Shirley Ryan AbilityLab in Chicago. Thread in some preparatory squats, too, she advises. “When you haven’t been exercising, you lose muscle mass.” Expect some muscle twinges after these preliminary, post-lockdown sessions, especially a day or two later. But sudden or increasing pain during exercise is a clarion call to stop and return home. |
| States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people. | States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people. |
| Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days. | Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days. |
| If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) | If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) |
| Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications. | Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications. |
| The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing. | The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing. |
| If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. | If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. |
| If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested. | If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested. |
| Still, the company had managed to avoid bankruptcy longer than another similar mall-based retailer, Sears, which filed for Chapter 11 protection in October 2018. | Still, the company had managed to avoid bankruptcy longer than another similar mall-based retailer, Sears, which filed for Chapter 11 protection in October 2018. |
| Since its bankruptcy, Sears has been trying to survive with a smaller footprint. But in February, the company that now owns Sears and Kmart, Transformco, closed an additional 96 stores, citing “increased competition and other factors.” | Since its bankruptcy, Sears has been trying to survive with a smaller footprint. But in February, the company that now owns Sears and Kmart, Transformco, closed an additional 96 stores, citing “increased competition and other factors.” |
| When J.C. Penney closes stores, it could have major implications for the mall landscape in the United States, which was already struggling with a widening chasm between the most popular and least-favored shopping destinations. It could leave vast and unappealing empty spaces at many malls. And it could also allow smaller retailers to leave, based on agreements that are often contingent on the presence of anchors like J.C. Penney. | When J.C. Penney closes stores, it could have major implications for the mall landscape in the United States, which was already struggling with a widening chasm between the most popular and least-favored shopping destinations. It could leave vast and unappealing empty spaces at many malls. And it could also allow smaller retailers to leave, based on agreements that are often contingent on the presence of anchors like J.C. Penney. |
| “When a J.C. Penney or a Macy’s goes out, it’s like a snowball effect,” Ms. Widlitz said. | “When a J.C. Penney or a Macy’s goes out, it’s like a snowball effect,” Ms. Widlitz said. |
| Green Street Advisors, a real estate research firm, said in a report last month that it expected more than half of all mall-based department stores to close by the end of 2021. It also said it expected J.C. Penney to eventually liquidate, even if it emerged from bankruptcy in the short term, saying that “a smaller store fleet is not going to solve J.C. Penney’s core issues.” | Green Street Advisors, a real estate research firm, said in a report last month that it expected more than half of all mall-based department stores to close by the end of 2021. It also said it expected J.C. Penney to eventually liquidate, even if it emerged from bankruptcy in the short term, saying that “a smaller store fleet is not going to solve J.C. Penney’s core issues.” |
| The company’s sales have steadily shrunk in recent years to $10.7 billion for the year that ended Feb. 1, when it posted a net loss of $268 million from continuing operations. | The company’s sales have steadily shrunk in recent years to $10.7 billion for the year that ended Feb. 1, when it posted a net loss of $268 million from continuing operations. |
| “J.C. Penney was already experiencing market share declines before Covid-19,” Ms. Boni said. “It would be difficult to turn around a business in this environment.” | “J.C. Penney was already experiencing market share declines before Covid-19,” Ms. Boni said. “It would be difficult to turn around a business in this environment.” |
| Contact Sapna Maheshwari at sapna@nytimes.com and Michael Corkery at michael.corkery@nytimes.com. | Contact Sapna Maheshwari at sapna@nytimes.com and Michael Corkery at michael.corkery@nytimes.com. |