JCPenney on the ropes

By Rhonda Campbell

Photo by Sam Howzit

People born after the 1980s might not remember how powerful a retailer JCPenney was. During the 1970s, it wasn’t Wal-Mart that was a fierce leader in the retail industry. Instead, it was department stores like Sears, K-Mart and JCPenney that American consumers flocked to when they wanted to purchase household goods, automotive products, shoes and clothes. That trend has clearly shifted.

JCPenney is struggling to keep pace with changing retail markets
Proof that JCPenney is experiencing hard times might be best revealed in the fact that the company’s CEO, Ron Johnson, had his bonus cut substantially in 2012. In 2011, Johnson received $53.3 million in annual pay; a year later, he received $1.9 million in total compensation.

A company representative is reported as saying that the cut was due to the fact that the company was far afield of its goals. However, in regards to the drop in pay, CNN Money also reports that, “Johnson’s compensation dropped sharply from 2011 to 2012 in large part because he received a special $52.7 million stock award upon joining the company. He did not receive any stock award for 2012, and got only 44% of his target cash compensation in view of the company’s poor results.”

The company’s stock dropped more than 60% over the course of a year. Since the start of 2014, JCPenney’s stocks have slid 27%. That’s not a good sign of a turnaround. To stop the financial bleeding, the company has announced that it will close 33 of its stores and lay off about 2,000 employees. It’s a far cry from what JC Penney once was.

During the days when JCPenney was a leading retailer, the Internet wasn’t popular. People drove, walked or caught buses to get to shopping centers. These shopping centers were generally strip malls, not larger malls that housed 80 or more stores, including discount designer stores.

It might be the fact that more Americans opted to shop at large malls, business places that were generally located away from downtown areas, that helped contribute to the decline that retailers like JCPenney and Sears have been experiencing.