Start of Retail Apocalypse: JCPenney Misses Interest Payment

Mish

JCPenney missed an interest payments. What's next is easy to envision.

Bankruptcy fears mount as J.C. Penney Skips Interest Payment.

J.C. Penney Co Inc said on Wednesday it will not make a $12 million interest payment on its long-term corporate bonds, a day after Reuters reported the department store operator was considering filing for bankruptcy protection.

In a regulatory filing, the company said it had a 30-day grace period to make the payment, on Senior Notes maturing in 2036, that was due on Wednesday, before it constitutes a default.

The 118-year-old company, which was already grappling with competition from online and off-price retailers, has taken a severe hit from the coronavirus crisis. It recently shut its 850 department stores, furloughed some employees and slashed spending.

JCPenney was doomed anyway but the coronavirus speeded up the effort.

More importantly, the entire super mall concept faces a day of reckoning.

Online shopping rises every year. And it takes employees to man every department no matter how few shoppers there are.

Millennials don't shop the way their parents did and their parents don't shop as much now as they once did.

Add it all up and this story is not so much about JCPenney but the pending retail apocalypse in general.

Mike "Mish" Shedlock

Comments (30)
No. 1-14
shamrock
shamrock

Department stores and medium box retailers are being replaced with restaurants, gyms, trampoline parks, etc.

Sechel
Sechel

Exactly! JC Penny was doomed anyway.
Macy's in the same position.
Weak companies in a bad environment are going to fail.

Maybe the dinosaurs would have died out even before the climate changed?

What I would focus on are not the retail stocks but CMBS. Companies like JC Penny & Macy's are anchor tenants in malls. They go the mall goes.

wootendw
wootendw

"JCPenney was doomed anyway but the coronavirus speeded up the effort."

And gave them a good excuse for some sort of government help.

Maximus_Minimus
Maximus_Minimus

What will happen to the shopping malls that rent to these retailers, and the pension funds that hold the debt. Eventually, it will strike much closer to home.

TumblingDice
TumblingDice

I like JC Penney.
The stores will probably get razed. 20 years from now people shopping online will realize what they see on their computer is NOT what is delivered by UPS.

Then a developer will come along and say Brick and Mortar is the way to go.

Count as a brick and mortar guy.

TumblingDice
TumblingDice

Mish do you own Amazon stock. Lol.

thimk
thimk

well like a said - we are witnesses a huge paradigm shift . America 2.0 post covid-19
will be significantly different . there will be winners and losers . look at seed/ag products . people will grow their own food, community co-ops will flourish. maybe a migration to rural lifestyles . e.g. >

Greenmountain
Greenmountain

Back when we believed in capitalism we would have recognized long ago that unfortunately these stores were going the way of milk delivery, the small town general store and buggy whips. But then we started playing games and suddenly cheap money allowed companies past their prime to stick around. It is painful - no one is denying that, Macy's was one of my favorite all time stores - but either you believe in capitalism and take the pain or you don't and you are a socialist. Start calling a spade a spade.

awc13
awc13

Rona is accelerating the trends that were already in place.

magoomba
magoomba

All those abandoned malls and stores will make swell homeless shelters. Of course, after they are no longer needed as death wards

KidHorn
KidHorn

My wife should take some of the credit. She's returned a lot of stuff to JC Penney that lots of other stores would never take back.

markonmish
markonmish

I thought someone stuck a fork in J C Penney a year ago...I'm surprised it took that long!

Silver2020
Silver2020

JC Penny, Macy's, Koll's Sachs Fifth Ave, Sears and many others are on their way out. Malls could cater to Virtual offices, food courts, Bars, Gyms, medical clinics and entertainment centers offering more experiences than material things.


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