JC Penney, century-old US departmental store chain, files for bankruptcy; largest retail casualty yet in COVID-19 crisis

The renowned American departmental store-chain, JC Penney, is the latest and largest victim of the economic difficulties arising out of the coronavirus disease (COVID-19)-necessitated restrictions across the globe and by extension, the US, which is currently the epicenter of coronavirus contamination in the world. The company filed for bankruptcy protection on Friday, after having witnessed a decline in business for almost two decades past, with the COVID-19 crisis simply exacerbating its financial strain.

Several reports elaborate on how JC Penney was a century-old cornerstone in almost all US malls, as it had grown over more than 100 years to be a household name across America with its budget-friendly clothing and reliable home furnishings.

The company, with its 850 stores and almost 90,000 workers, is currently being deemed to be the largest retail casualty in the COVID-19 crisis so far. Economic experts and market watchers have conjectured that the entire pre-existing economic model of the world is unraveling, as of this moment, which might prove fatal for many companies that were already debilitating under a substantial burden of debt.

Even before the coronavirus outbreak, JC Penney was struggling with nearly $4 billion dollars of debt, according to a report by The Guardian. It was also facing increasing competitive pressure from large discount retailers like Walmart and Target, as well as from e-commerce giants like Amazon, which are proving to be the favourable alternative for customers across the world and digging the grave for smaller retailers which fail to compete with the bargain-price apparel provided by their significantly large-scale rivals.

Although JC Penney had started reopening stores in stages of loosening restrictions, much like others, customer footfall and spending are extremely low during this period. The Guardian report states that against this backdrop, the company already faced a "looming $105 million debt payment in June and $300 million of annual interest expenses." Thereby, the company declared bankruptcy. Reuters sources state that initially, the company will permanently close down 200 of its stores while disclosing further details in the coming weeks.

James Cash Penney, Jr. founded the eponymous retailer with partners in 1902 in Kemmerer, Wyoming. Averse to the haggling that was common at the time, he believed prices should be low, set and marked, an attitude that served as a precursor to modern shopping, according to the JC Penney Museum in Hamilton, Missouri, the founder’s hometown.

"By the 1990s, the company was viewed as a respectable shopping destination that was more affordable than Macy’s but more upscale than discount outlets", according to the New York Times.

The COVID-19 pandemic spells doom for several retail chains with brick-and-mortar stores, such as J. Crew, the Neiman Marcus Group, and the designer men’s clothing brand John Varvatos.