- [Narrator] This is the J.C. Penney department store
in Hurst, Texas.
Unveiled in 2019, the remodeled store
includes style coaches, fitness classes, and a coffee bar.
It represents the latest strategy
that J.C. Penney has deployed
in an effort to draw in customers.
J.C. Penney rose to prominence as a national retailer
by dressing the middle class,
but analysts say the retailer's costly shifting strategies
have failed to attract the modern middle class customer,
leading the company to file for bankruptcy.
With so many Americans staying home
because of the coronavirus crisis,
sales across the retail industry have plummeted,
creating an uncertain future for many retailers.
Here's how J.C. Penney fell from the top of retail.
J.C. Penney was founded in Kemmerer, Wyoming in 1902
by James Cash Penney.
The first store was named the Golden Rule
and catered to farmers
by selling blue jeans and other work wear.
The retailer changed its name to J.C. Penney
and expanded to locations across the United States.
- J.C. Penney was quality clothes at a fair price.
They basically dressed the middle class,
and they had everything from clothes for kids
to career clothes for women and men.
- [Narrator] In 1958, it began allowing customers
to make purchases on credit,
and in 1963, J.C. Penney released its first catalog.
- Well, they sort of came up during the era
when shopping malls were populating the country.
They were sought after by mall developers to be anchors.
They developed these private label brands
like Arizona Jeans and Worthington
that customers just loved.
- [Narrator] The retailer's stock price
rose throughout the 1980s and '90s,
but with the rise of fast fashion and e-commerce,
retailers like J.C. Penney have faced problems
in recent decades.
- Particularly, retailers in the middle
that were neither high nor low
found themselves in distress.
- [Narrator] J.C. Penney hired former Apple executive
Ron Johnson in 2011.
As CEO, Johnson scaled back promotions
and discontinued private brands.
- He had run Apple's retail stores
and been very successful
making Apple a very hot place to shop.
He shifted to an everyday low price strategy,
which sounds good in theory,
but it turns out, customers really like deals.
- [Narrator] Then former Home Depot executive Marvin Ellison
took charge in 2015.
He brought back appliances to the store,
a product category J.C. Penney hadn't sold since 1983.
- Appliances, you know, it's a whole different business.
It's different distribution, it's different skills,
it's lower margin, and as Penney really focused
on rolling out appliances, it took its eye off apparel,
which is where it makes the bulk of its money.
- [Narrator] Between 2014 and 2018,
J.C. Penney only had three profitable quarters.
Since Jill Soltau took the helm in 2018,
the brand has been trying to implement changes
like those in the Hurst location.
- Unfortunately, they haven't really had enough time
to see what works, and they don't really have the money
to roll this out en masse.
Its stock had been trading below $1 for long enough
that the New York Stock Exchange
had notified the company that it was at risk
of being de-listed,
and they have been in talks with creditors,
but they were not able to reach a deal before the crisis.
- [Narrator] In March, J.C. Penney announced
it would be closing all of its stores
and furloughing workers in response
to the coronavirus outbreak in the United States.
In April, Fitch downgraded the company's bond rating,
which was already in junk territory,
and soon after, the company announced
it would skip an interest payment owned to bond holders.
- You know, all its stores are closed.
It's lost most of its revenue.
What is the inventory going to be worth
when they can actually get around to selling it.
There are a lot of unknowns that just make
the whole process more difficult.
That sort of middle of the road department store
has really lost favor,
and you need to really define who you are.
This sort of, like, trying to be everything to everyone
is not a game you can play in today's world.
(pleasant ambient music)