After a May 7 bankruptcy filing, JCPenney was given until the end of July to formulate a future business plan that appeased the court and the department store’s creditors. JCPenney survived the deadline without a liquidation scenario and talks with potential buyers have continued.
Earlier this week, the New York Post reported that a private equity firm was the winning bidder in the bankruptcy discussions and the Penney name would disappear and be merged into another retailer. Joshua Sussberg, bankruptcy attorney with Kirkland & Ellis for JCPenney, strongly denied the Post’s “ill-informed” report. Sussberg told CNBC, “I want to say, unequivocally, we have had not one discussion about a liquidation. It’s simply not in the cards.”
On Friday, the retailer distributed the “JCPenney Disposition Portfolio.” The document, prepared by the real estate firms of Cushman & Wallace and B. Riley, listed 142 leased locations and 21 company-owned stores that are scheduled for a mid September auction. These 163 locations were targeted for closure in order to help facilitate the company’s sale as part of the court proceedings.
The list of leased locations is largely comprised of stores currently involved in formerly-announced liquidation proceedings. However a list of 21 company-owned stores comes with at least one surprise. The Kemmerer, Wyoming JCPenney, the company’s first location, is scheduled for a mid September auction. The store will likely be liquidated and closed soon after this auction date.
The Kemmerer JCPenney has remained in continuous operation since its April 14, 1902 opening. It’s referred to as the “Mother Store” or “Store Number 1” in company documents and signage. The location is part store, part museum. It’s as much of a tourist destination as a retail destination. But its anticipated closure will now erase a part of American retail history and the community’s local identity.
Kemmerer, Wyoming is located in the southwest part of the state and is approximately 100 miles northeast of Salt Lake City. It’s home to less than 2700 residents and was a former center of the coal mining industry. That’s what helped bring James Cash Penney to town.
For the past 118 years, the 8232 square-foot store has been a retail anchor for rural Lincoln County. Shirts, blue jeans, and undergarments are stacked for sale under a tin ceiling with period lighting. A small mezzanine section overlooks the tightly-packed main sales floor. The store is filled with ephemera and photographs and also serves as a tribute to the company and the founder. سفر مشاور has designated the Kemmerer JCPenney as a “Things To Do” attraction for Wyoming visitors. It’s even located on JCPenney drive and Mr. Penney’s former home is just around the corner.
Yesterday’s Disposition Portfolio also includes store locations in Citrus Heights, California, Fort Worth, Texas, Madison, Wisconsin and Peoria, Illinois. The bidding deadline for these locations, along with Kemmerer, is September 9. The auctions will occur on September 14 and September 15. These stores will likely be liquidated and closed shortly after the auction.
The exact reasoning behind closing the historic Kemmerer location is unknown. JCPenney has been in turmoil but the Kemmerer store has survived the peaks and numerous valleys the retailer has experienced over the past several decades. Representatives from B. Riley and JCPenney were unable to provide further details on the decision.
According to reports, three firms remain in active talks with the bankrupt retailer. However, the talks are held behind closed doors so exact discussions cannot be confirmed. It has been verified that three firms are interested in JCPenney. The private equity firm, Sycamore Partners, has offered $1.75 billion. The Canadian retailer Hudson’s Bay Company, also owned by a private equity firm, submitted a $1.7 billion offer. A collaboration between two retail developers, Simon and Brookfield Properties, bid $1.65 billion. No purchase decision has been made.
Simon and Brookfield have the most invested in winning the bid. JCPenney serves as a retail anchor at many of their centers and vacant buildings do not attract customers. And it won’t be the first time Simon and Brookfield combined forces and purchased a retail firm. In February, Simon and Brookfield together purchased the financially distressed Forever 21 clothing store company to avoid mass vacancies within their properties.
As per the bankruptcy process, all purchase bids for JCPenney ended on July 22. The winning bidder was initially expected to have been decided by now but talks have continued. It has been said that the three known bidders want to keep the retailer alive. But they are not just purchasing a department store company, they are also assuming JCPenney’s massive debt load that must be restructured.
The closing of the Kemmerer JCPenney store is unlikely to make any dent in solving the company’s financial woes. Its sale is more of a symbol or statement. JCPenney has moved past its 1902 roots as a retailer. In 1940, Mr. Penney defined his company as a store that served Blue Collar Americans with basic merchandise that customers needed. Though its Mother Store will soon close, JCPenney’s bidders and creditors now have to figure out how and where to bring the beleaguered department store into the future.