This is not the end that JCPenney had in mind for Soltau when it was presented in October 2018, at least not very soon. Few expected JCPenney to completely avoid bankruptcy, as his huge debt pile will arrive in the coming years. But the pandemic pushed JCPenney to the limit much faster than anyone had imagined.
On January 1, Stanley Shashoua, chief investment officer of Simon Property Group, will become the interim CEO of JCPenney, the company’s fourth in six years.
When Soltau took over JCPenney, the store was a mess. Former CEO Marvin Ellison had introduced appliances to the store to get former Sears customers to venture through the mall to JCPenney, from a bankrupt department store to a nearby one. The gambit failed, Ellison left for Lowe’s and Soltau was hired to clean things up.
He implemented a “strategy renewal plan,” in which JCPenney reduced the amount of merchandise he presented in stores, struck a can of new paint inside and out, and introduced a clean logo and focused a new approach on e-commerce. The company’s shares initially rose, 10% more on the day of its announcement.
Everything was coming down from there. Securities fell below US $ 1 two months after Soltau took over the investment because investors understood the reality: JCPenney had a $ 4 billion debt, with a gross credit rating, a cash deposit that it sank and showed no signs of rapid change. Few buyers entered its stores, so the company had an excess of inventory and supply chain struggles with no clear marketing plan or strategy. To move the excess clothing, JCPenney was forced to offer heavy discounts.
Although Soltau, Joann’s former CEO and veteran retail leader, said his improvement plan had begun to work, the company was simply out of date. Covid-19 endangered the entire retail business and decimated troubled retailers like JCPenney.
In May, the famous department store chain went bankrupt, after being dragged down by years of mistakes. The company went bankrupt a month ago, when mall owners Simon Property Group and Brookfield Asset Management, fearing losing one of their big tenants, bought JCPenney.
But their prospects remain bleak. The company has closed stores on the right and left and has not recorded any annual profit since 2010.
The new owners of JCPenney said they would look for a new CEO who is “focused on modern retail, the consumer experience and the goal of creating a sustainable and long-lasting JCPenney.” Apparently, they didn’t think it was Jill Soltau.
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