This is not the ending that JCPenney thought of when he took over Soltau in October 2018-at least not soon. Few people expect that JCPenney will mature large amounts of debt in the next few years, thus avoiding bankruptcy altogether. But the pandemic pushed JCPenney to the edge, much faster than anyone thought.
On January 1, Stanley Shashoua, Chief Investment Officer of Simon Property Group, will become JCPenney’s interim CEO, the company’s fourth CEO in six years.
When Soltau took over JCPenney, the store was in chaos. Former CEO Marvin Ellison introduced electrical appliances to the store, so that former Sears customers went from a bankrupt department store to the entire JVCenney mall that is about to become another department store. Failed, Ellison left for Lowe̵
7;s, Soltau was hired to clean things up.
She implemented the “Renewal Strategy Plan” in which JCPenney reduced the number of merchandise displayed in the store, put fresh paint cans on the interior and exterior, introduced a cleaned logo, and placed a new focus on On e-commerce. The company’s stock initially soared-up 10% on the day of her announcement.
It is downhill from there to there. Two months after Soltau took over, the stock fell below US$1 because investors understood the reality: JCPenney had a debt of US$4 billion, a junk credit rating, and continuous cash accumulation, and there was no sign of a quick recovery. Very few shoppers enter its store, so the company is distressed by overstocking and supply chain issues, and has no clear marketing plan or strategy. In order to move the excess clothes, JCPenney was forced to offer substantial discounts.
Although Soltau, Joann’s former CEO and senior head of retail operations, said her improvement plan has begun to work, the company simply doesn’t have time. Covid-19 put the entire retail business into trouble and eliminated troubled retailers such as JCPenney.
In May of this year, the legendary department store chain was on the verge of bankruptcy due to years of mistakes. The company exited bankruptcy a month ago when shopping mall owners Simon Real Estate Group and Brookfield Asset Management acquired JCPenney, worried about losing one of their largest tenants.
But its prospects are still grim. The company has been shutting down and has not recorded annual profits since 2010.
The new boss of JCPenney stated that they will look for a new CEO who will “focus on modern retail, consumer experience and the goal of creating a sustainable and enduring JCPenney”. Obviously, they did not believe that it was Jill Soltau.