This could be the last Christmas for some of these broken brands.
The once venerable department store chain J.C. Penney (NYSE:JCP) is circling the drain right along with Sears. The retailer had briefly shown signs of a comeback, but its recently released third-quarter earnings report fueled speculation that all of the changes it made may have been for naught.
After being upended by efforts to drag the aged department store into the 21st century, J.C. Penney undid virtually all the new-era improvements that had been made, and the chain’s finances appeared to have stabilized. However, amid a severe slump in sales, the company recently decided to “reset” its women’s apparel department by liquidating much of the inventory. Given that this segment accounts for a quarter of J.C. Penney’s revenue, that inventory dump did little to inspire confidence in the company’s turnaround efforts.
Unlike Sears, which can dip into the deep pockets of its hedge fund chairman to stay afloat, J.C. Penney is bereft of benefactors. As Amazon.com positions itself to become the biggest apparel retailer in the market, the outcome for this shopping-mall mainstay looks bleak.
It was expected that when Linens n Things went bankrupt, Bed Bath & Beyond (NASDAQ:BBBY) would pick up the ball and keep running downfield. Instead, Amazon suddenly became a viable competitor to home goods retailers, even as mass merchandisers like Wal-Mart, Costco, and Target expanded their selections.
Bed Bath & Beyond also made a major mistake in almost completely ignoring the online space. It wasn’t until late in the game that it made a concerted effort to build up its e-commerce presence, and even then it got distracted, creating failed “flash sale” site One King’s Lane and branching out into more categories that are far afield from its core competency.
In addition to buybuy Baby, Christmas Tree Shops, Harmon Face Value, and Cost Plus World Market, it also owns Of a Kind, PersonalizationMall.com, Chef Central, Decorist, and Linen Holdings. And now there are more competitors encroaching on its territory, such as At Home, a sprawling home decor supercenter.
In the wake of its niche’s upheaval, Bed Bath & Beyond may have made itself superfluous.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon, Hasbro, and Walt Disney. The Motley Fool recommends Costco Wholesale. The Motley Fool has a disclosure policy.
Rich has been a Fool since 1998 and writing for the site since 2004. After 20 years of patrolling the mean streets of suburbia, he hung up his badge and gun to take up a pen full time.
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