This isn’t the end JCPenney had in mind for Soltau when she was hired in October 2018 – at least not so soon. Few expected that JCPenney would avoid bankruptcy entirely with its massive debt burden due in the coming years. But the pandemic pushed JCPenney to the brink much faster than anyone could have imagined.
On January 1, Stanley Shashoua, Chief Investment Officer of Simon Property Group, will become JCPenney’s interim CEO, the fourth in six years.
When Soltau acquired JCPenney, the store was in shambles. The previous CEO, Marvin Ellison, had introduced devices to the store to lure former Sears customers across the mall to JCPenney, from one bankrupt department store to the future. The game backfired, Ellison left for Lowe’s, and Soltau was hired to clean things up.
She implemented a “Plan for Renewal” strategy, whereby JCPenney reduced the amount of merchandise it displayed in stores, knocked in and out a new can of paint, introduced a cleaned logo and put a new focus on e-commerce. Shares of the company initially rose – 10% higher on the day of its announcement.
From there it went downhill. The stock fell below $ 1 two months after Soltau took the lead, as investors understood the reality: JCPenney had $ 4 billion in debt with a junk credit rating, a declining cash supply and showed no signs of a rapid turnaround. Few customers entered the stores, so the company was saddled with inventory overload and supply chain problems with no clear marketing plan or strategy. To move excess clothing, JCPenney had to offer hefty discounts.
Although Soltau, Joann’s former CEO and veteran train operator, said her improvement plan was starting to work, the company just ran out of time. Covid-19 put the entire retail industry in trouble, decimating retailers like JCPenney.
In May, the legendary department store chain filed for bankruptcy after years of blunders brought them to the brink of collapse. The company went out of bankruptcy a month ago when mall owners Simon Property Group and Brookfield Asset Management, fearful of losing one of their biggest tenants, bought JCPenney.
But the outlook remains bleak. The company has closed shops left and right and has not had an annual profit since 2010.
The new owners of JCPenney said they would look for a new CEO who is “focused on the modern retail industry, the consumer experience and the goal of creating a sustainable and long-lasting JCPenney”. Apparently they didn’t believe it was Jill Soltau.