Lion of the Blogosphere

Is J.C. Penney next?

Their stock price (JCP) peaked above 80 in 2007, but yesterday it closed at $1.56. It didn’t get any boost from the Sears bankruptcy, just the opposite, even though there have been some news articles predicting a small increase in same-store sales from Sears customers. The company has been losing money since 2014. Stuck in long-term leases at failing malls.

I think that without anchor stores, mall traffic declines, and therefore the liquidation of Sears could ironically hurt other stores based at the same mall.

Written by Lion of the Blogosphere

October 17, 2018 at EST am

Posted in Business

42 Responses

Subscribe to comments with RSS.

  1. Department stores and malls are finished. When was the last time you went into a mall to shop? I’d say at least four out of every five are dying. Something deeply depressing about a dying mall. These desolate temples to consumerism. A dying mall brings down a huge area of real estate all around it as well. Wrecks property values. Breeds crime. Just terrible. A sad indictment.

    Two in the Bush

    October 17, 2018 at EST am

    • I was at Macy’s during the last year. But the one at 34th Street which is not mall-based. (Macy’s owns that building and its extremely valuable real estate. Unlike real estate in shopping malls, that location is worth a lot of money converted to office space.)

      Also, as I’ve said before, if you go to Macy’s when they’re having a big sale, you can get a quality men’s suit for less than you could get it anywhere else. But you have to know what you are looking for, or you might buy a guido-suit by accident.

      Lion of the Blogosphere

      October 17, 2018 at EST am

      • Please do a post on how to know what you are looking for and get a quality suit at a discount

        Michael Mason advises custom suits only but he is a millionaire and i’m Not

        Anon

        October 17, 2018 at EST am

      • @Anon.

        The key to a quality suit is to have a good triangular but not overly bulky physique. Then any suit will look good on you, and bespoke suits will look even better.

        Seth Largo (@SethLargo)

        October 17, 2018 at EST pm

      • @Anon.

        “The key to a quality suit is to have a good triangular but not overly bulky physique. Then any suit will look good on you, and bespoke suits will look even better.”

        Suits don’t really look good on heavy people. Trump has nice suits but he is getting too big for them to look good on him.

        A nice sweater vest would look better on many people. I think Steve Jobs wore those.

        I saw on Proper Cloth sports jackets that have more natural, rounded shoulders.

        Suits in the past seemed more functional. It seemed they were made to be worn and moved in instead of almost being on a mannequin.

        I can’t suits with really skinny legs. They are almost as tight as jeans.

        ttgy1

        October 17, 2018 at EST pm

    • I dunno. Movie theaters are still thriving in the day of Netflix and other streaming services. It’s easy to buy a book or hard drive online; not so much a pair of pants or shoes that have to fit you perfectly. Gotta go to the store for that. The communal experience of navigating a mall festooned with holiday decorations can’t be beat.

      Brendan

      October 17, 2018 at EST am

      • I agree – with shoes you really have to know what fits you. It’s a PITA to send shoes back. With DSW I can order online & take it back to the local store -but that goes against your point, which is that bricks and mortar are yesteryear.

        gothamette

        October 17, 2018 at EST pm

      • For years I’ve bought shoes only at a small independent store. They’re extremely helpful and always seem to have just what I need.
        A couple years ago, out of curiosity, I went to a nearby DSW. Men’s shoes were *maybe* 15% of the store, like they expect all men to go around barefoot or something, and even if I wanted to buy shoes I would’ve been out of luck because I wear a wide width and they carried zero wide widths.

        Peter

        ironrailsironweights

        October 17, 2018 at EST pm

      • “. Men’s shoes were *maybe* 15% of the store, like they expect all men to go around barefoot or something”

        More like they expect men to own two pairs of shoes while women own 12 pairs of shows.

        Lion of the Blogosphere

        October 17, 2018 at EST pm

  2. Both Sears/KMart and JC Penney have left my small town in north-central Ohio after doing business there for 80 years or so. They also anchor one of the largest malls in Columbus, Ohio, Polaris. The whole Polaris development of several hundred acres was corn, beans and trees 30 years ago. With two huge empty spaces, can the Polaris mall survive?

    bob sykes

    October 17, 2018 at EST am

    • If J.C. Penney goes under next year because of a bad Christmas season (could happen), I think that many malls won’t survive losing both Sears and J.C. Penney.

      Lion of the Blogosphere

      October 17, 2018 at EST am

    • It’s a nice mall, seems like women love it. They need more things for men and kids. Recent transplant to Columbus area, there were less than 5 stores that appealed to men or kids.

      Easton recently added Lego world which is a good idea.

      XVO

      October 17, 2018 at EST pm

  3. JCP seems to be generating cash and paying down debt, while sales are basically flat. Financial situation not nearly as bad as Sears, which had negative operating cash flow.

    I.e., it’s not clear that Sears, even if it had no debt, would be a viable business. They’ll try to sort that out in bankruptcy, which gives them power to break leases and so on. But JCP is currently a viable (if not great) business that happens to have too much debt. Of course, things could quickly start going south there.

    The mall closest to me remains extremely popular, an absolute madhouse. Sears moved out a few years ago, but the Apple Store moved in around the same time. It’s in a much smaller space but probably generates more traffic than Sears has in 20-30 years. I know city centers have had Apple Stores for a while, but in flyover suburbia, they’re still a pretty new phenomenon and located mostly in malls.

    One thing about malls is that most of the cool/fun stores are gone, from the standpoint of a man or especially a kid. Bookstores, toy stores, arcades. Say what you want about Sears, but at least you could go there and look at tools while your woman was off somewhere trying on clothes. Back in the day, I seem to remember malls being roughly 50% clothing stores, but now I bet it’s closer to 90% if you exclude restaurants.

    Wency

    October 17, 2018 at EST am

    • Barnes & Noble are in many upscale malls.

      Lion of the Blogosphere

      October 17, 2018 at EST am

      • Not here. The local upper-middle suburban mall once had 2 bookstores, both gone for perhaps a decade. The upscale mall near downtown had an excellent local bookstore, with authors often coming in to do readings and signings. Closed for 7-8 years, I’d estimate.

        In their place: more clothes.

        Wency

        October 17, 2018 at EST am

    • Apple Stores have the highest sales per square foot of selling spaces of all stores of all types with the exception of some very high-end jewelry stores like Tiffany and Cartier.

      Peter

      ironrailsironweights

      October 17, 2018 at EST pm

  4. The local mall in Danbury, Connecticut seems really busy, and I was pondering that, trying to figure out why it wasn’t dying like other malls.

    There’s an Apple store which always seems pretty busy. I bet that pulls people into the mall. There’s also a Microsoft store which is always empty.

    There’s an LL Bean store (big store) and Dick’s Sporting Goods, which isn’t typically a mall store, but it does bring people.

    There was some department store that closed a few years ago and it was converted to a Cheesecake Factory and a Brio (sort of Italian type place, think a step or two above the Olive Garden, but as big as a Cheesecake Factory). It has a food court with the usual stuff, plus there’s a burger chain and a Chipotle.

    Half of the Sears was about two years ago became a Primark. This is an Irish chain with really cheap clothing. It’s good for workout clothing and clothes for your kids: I got my son khakis there for $12 or something.

    These seem to have kept traffic in the mall. It even has about 15 Tesla superchargers. The mall is right off of Interstate 84.

    The Brookstone recently went under, and a few of the weird clothing stores went out (Aeropostale or something). But overall, the mall looks busy. There’s no movie theater.

    GMR

    October 17, 2018 at EST am

  5. As malls and shopping centers slowly die across America and retail commerce moves online, that will also mean there will be that fewer places for single men and women to meet and hang out…as if the dating landscape in modern America wasn’t difficult enough.

    Oswald Spengler

    October 17, 2018 at EST am

    • It’s te Trump era – bring back skating rinks.

      Marty

      October 17, 2018 at EST pm

    • Tinder, match, eharmony, pof.
      Dating landscape is easier than before, not harder

      wt

      October 17, 2018 at EST pm

      • Those apps benefit alpha males and the kind of women who like to ride the alpha carousel.

        Lion of the Blogosphere

        October 17, 2018 at EST pm

      • Agree with wt. Based on my recent experience, dating is much easier now than it was 10 years ago. I was able to easily sift through a vast number of duds and large number of halfway promising women to find current girlfriend. And I’m not exactly an alpha. Every girl is online now, while a decade ago online dating still carried a huge stigma.

        Dating may be harder than it was 30+ years ago due to increased social atomization and decline in the cultural and genetic quality of our population. Then again, there are enough male burnouts, manchildren, and soyboys that the competition isn’t exactly what it once was either.

        Wency

        October 18, 2018 at EST am

  6. For the past 10 to 15 years, the shopping mall trend in FL has been to build “open air” malls and convert old, dying traditional malls to “open air.” This seems like it would make an uncomfortable shopping experience considering it’s 85 to 92 degrees, 90% humidity, and torrential downpours for six to nine months out of the year.

    E. Rekshun

    October 17, 2018 at EST am

  7. A few years ago I hauled J.C. Penney, or at least the shyster bank that handles their credit cards, in front of Liz Warren’s CFPB, after they refused to credit my Mom with paying her bill in full. CFPB challenged them to respond to my documentary showing, and they folded. My mom got an effusive apology. I think they carry decent stuff, but use your VISA, not their brand card. They’ll give you the same “discount” if you ask.

    Commercial-Residential

    October 17, 2018 at EST pm

  8. From my vantage point in suburban L.A., enclosed malls are dying but the open air malls (which is all they are) are always pretty busy. Places like this that try to mimic a stroll through Beverley Hills:

    https://archinect.imgix.net/uploads/5t/5twkyp9vace8pgmr.jpg?auto=compress%2Cformat

    Seth Largo (@SethLargo)

    October 17, 2018 at EST pm

    • They look more SWPL.

      Stores that are selling fashion shouldn’t be surprised that shopping-center architecture also has its own fashion trends. Yet they are surprised.

      Lion of the Blogosphere

      October 17, 2018 at EST pm

      • That is wise commentary. You should find a way to say that in an extended presentation and get a job as a consultant.

        Seth Largo (@SethLargo)

        October 17, 2018 at EST pm

    • Yeah, they put words like “outlets” where the name “mall” would have gone. The sidewalks are in the center, and the parking is around the edges, with the stores between the sidewalks and the parking. Lots of SWPL stores like to get in on this: REI, Whole Foods, etc. That kind of architecture is anchor store friendly, but not as friendly to the smaller retail spaces. Also great if you hate walking.

      MoreSigmasThanYou

      October 17, 2018 at EST pm

  9. People in the real estate industry call this general trend “the retail apocalypse”. Online shopping is driving it, of course, but U.S. retail also suffers from overcapacity (compared with other first world countries) and too much private equity driven debt.

    It’s worth noting that a lot of retail space is dedicated to “experiential retail”, or things that can’t be easily replicated at home (like getting your hair cut). That stuff is still doing fine. Unlike dry goods stores, grocery stores have also remained strong, but Amazon’s purchase of Whole Foods doesn’t bode well for that sector.

    This piece from last year is worth reading:

    https://www.bloomberg.com/graphics/2017-retail-debt/

    fakename

    October 17, 2018 at EST pm

  10. Soon Penney will be a penny stock.

    gothamette

    October 17, 2018 at EST pm

    • Short Hills NJ has a luxury mall. There was a horrific carjacking murder there a few years ago, though.

      gothamette

      October 17, 2018 at EST pm

      • With the holiday shopping season coming up, we’ll see the usual spike in violent armed car-jackings and robberies at mall parking lots throughout the country,

        E. Rekshun

        October 17, 2018 at EST pm

      • That is exactly what happened at Short Hills. Christmas robbery.

        gothamette

        October 17, 2018 at EST pm

  11. Malls are still very healthy in Europe and Asia. Things that help- little to no NAMs and the fact most malls also have the best or only supermarket in the area.

    PerezHBD

    October 17, 2018 at EST pm

    • So the supermarket works as an anchor store. Demonstrating how malls need anchor stores to be successful.

      Lion of the Blogosphere

      October 17, 2018 at EST pm

  12. Lion, this is OT but I went to a trivia night at a bar last night, and the whole time I kept wondering if bar trivia nights are prole or not by definition, or if it depends on the bar and the crowd. Please solve this riddle for me.

    Seth Largo (@SethLargo)

    October 17, 2018 at EST pm

    • Less prole than other events that might happen at a bar, but still prole. Think Cliff Clavin..

      Lion of the Blogosphere

      October 17, 2018 at EST pm

    • Was there a category “Deep Purple songs”?

      Curle

      October 17, 2018 at EST pm

  13. Years ago, I bought some clothes at deep discount from a Dillard’s that was closing. The store was located in a struggling mall. They had just lost their Sears and it was having a domino effect. The mall is now defunct. Basically, the area went black. Between the shoplifting (which cost money) and crime (which drove away customers) the mall was doomed. Online shopping was just the final nail in the coffin. But this trend in failing malls predates that.

    PS: “Shoplifting” and “crime” doesn’t adequately describe what was happening at this mall. It wasn’t uncommon to see several black women grab arm loads of clothes and go running out to a car waiting at the curb. Nor was it uncommon to see large brawls or mob attacks. I once saw a car load of blacks pull up in front of a mother and 12 year old girl in the parking lot. A couple of guys tried to pull the girl into the car and the mother was having a tug-of-war to stop them. They only left when they saw other people running to help.

    destructure

    October 17, 2018 at EST pm

    • That second story is amazing. I witnessed an example of the first back around 1998. I was walking up Telegraph Ave. toward the Berkeley campus, when all of a sudden a black girl burst out of the GAP store and came running toward me carrying what looked like 50-100 items of clothing on hangers. Normally I’m the type to get involved, but I was so shocked I didn’t react in time.

      Marty

      October 18, 2018 at EST pm

  14. Three years ago Walmart was closing in the area. Everything was 50% off and was gone in three days. I went there five or six times, spent total of about one thousand dollars. It was the best shopping spree in my life.

    My 2c

    October 17, 2018 at EST pm


Comments are closed.

%d bloggers like this: