Ah yes, the invisible hand of the market appears to be guiding current trends again. In fact, it may be slapping several major companies around! Some of the most well known names you expect will be just around the corner when you need them have been taking a serious bruising. But why?
What has really been going on inside the boardrooms, and what can consumers expect for the coming year? Changes are being made as we speak to thwart the grisly end, but it is not clear who will survive and who will thrive. Let’s explore a few companies in the news right now!
Sears has been an American institution since 1893, but it may now be over for the chain that we all took for granted would be forever attached to our local mall. Perhaps we ignored it, but who thought it would be closing its doors? The business model has been revised many times over the last ten years, and it seems they have tried everything – closing 142 locations, cutting costs, layoffs – and it still filed for bankruptcy during the grueling process. Yikes!
Shocking to hear, but maybe less so when looking at general market trends over the previous decade. Consumers have moved over to Amazon and other big online retailers more than ever for many of the goods that Sears traditionally offered in its large brick and mortar locations. Electronics and even jewelry are big internet business, and let’s face it – the endless racks of clothes were always mediocre at best. Very few Americans ever put Sears in their top ten fashion destinations, with plenty of trendy choices at the mall just steps away from the department store. Perhaps its niche was large home appliances for awhile. Fair enough, but will consumers be loyal in this hour of dire need? We will wait and see! Are you rooting for Sears?
Toys R Us
Toys R Us, it cannot be true! Well, apparently it is – and it has been for awhile. In 2018, the chain announced it would liquidate its stores and shut down locations as quickly as possible! And by locations, we mean 735 locations. But is this really the end for the chain that provided pure magic for millions of American children since 1948?
At the end of 2018, the leadership left at the company halted the bankruptcy process. But why? Remaining open meant continuing to pay rent for large buildings across the country without significant revenue to cover it. It turns out that there was indeed a plan: The company is now under new ownership and has even undergone a name change. Locations under a new business plan will be called Geoffrey’s Toy Box and Tru Kids, and a partnership with mega grocer Kroger’s sounds interesting. We will have to see how their Christmas 2019 numbers turn out, but the reality is that Toys R Us as we all knew it is no more!
Pier 1 Imports
Pier 1 Imports too? It cannot be! We loved going into this magical world of exotic and comforting home decor, if only to sit on the rattan round cushion chairs and smell a few candles. The company already closed 30 stores in the last fiscal year, and it is currently considering the shuttering of 145 more locations. But why? What is going on here, Pier 1?
Pier 1 claims that current tariffs on Chinese goods have hurt the chain, exacerbating existing issues. The chain has not been meeting sales goals for awhile, and has lost hundreds of millions of dollars over the last few years. S&P Global has downgraded the company’s credit rating and its stock is trading at a low. Right now, they are restructuring a variety of internal issues related to e-commerce, sourcing, supply chain logistics, and more. Their success or failure will certainly be interesting to watch over the next few years, but today things are not yet looking bright. Not yet, we say!
It looks like PetSmart might be in trouble, too. Oh no! With around 1,500 stores in North America, they may have to close some soon. Currently, their debt totals $8 billion, and restructuring is first on the to-do list for its company managers. Just like many traditional storefronts, PetSmart has taken a hit from online retailers promising the same products without the rental and labor costs baked into the customer’s price tag.
PetSmart has tried to get into the online purchasing shift, buying a website called Chewy that might be able to supplement profits in the future. They paid $3.35 billion for the site, and currently it is up on public offering for $4.75 billion. PetSmart’s purchase was actually the largest for any e-commerce site in history at the time, so it looks like they are serious about investing in their new business model. Will it save them? Perhaps the next few years will reveal their fate!
JCPenny has been around forever, but have you shopped there lately? Perhaps not! Just like Sears, this giant department store corporation has been burned by the rise of endless online competitors. Last year, 1,000 workers were let go. CEO changes have been implemented a few times over the last decade, but it seemed they found no adequate solutions with turnaround plans in that time period.
JCPenney announced a new CEO for 2019: Bill Wofford, the former CFO of Vitamin Shoppe. And he’s got a big job ahead! Currently, the company holds a debt of $4.2 billion – though they are not yet in bankruptcy. Upcoming changes include the closures of many mall locations across the country, as well as cutting appliances and furniture from its stock. Moving forward, the chain hopes to focus on plus-size clothing, athletics, and women’s attire in general. They will also sell a variety of home goods, perhaps providing more focused offerings for customers to stop by in the future. If it’s any consolation, they are still doing a lot better than Sears! Best of luck, JCPenney.