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Tag: Department Stores

  • Amazon Poised to Open Department Stores

    Amazon Poised to Open Department Stores

    Amazon may dominate e-commerce, but reports show it now plans to take on traditional retail with its own debarment-style stores.

    Department stores were once a staple of American life and the go-to place to shop for everything from clothes to household items. In recent years, however, e-commerce has taken a toll on the industry, with many going into bankruptcy or making major changes to how they do business.

    Now Amazon, arguably one of the biggest factors in the demise of the industry, is now preparing to open its own department-style retail stores in California and Ohio, according to The Wall Street Journal.Amazon already has some retail locations, such as bookstores and the Whole Foods chain it purchased 2017. The company also has its 4-star stores, although those primarily sell gadgets.

    According to WSJ, Amazon’s new retail stores will be roughly 30,000 square feet, quite a bit smaller than a traditional department store, which usually comes in around 100,000. Even so, the new stores will be much larger than the company’s other retail efforts and will offer the full range of products from top brands, much like a traditional department store.

    While nothing is a sure bet, Amazon’s chances of success are pretty good. Having its own stores would give users the ability to try on clothes before buying them, eliminating one of the more frustrating aspects of online shopping.

  • Neiman Marcus Files for $100M IPO

    Neiman Marcus Files for $100M IPO

    Department store Neiman Marcus this week announced that it has filed for an initial public offering. According to a registration with the Securities and Exchange Commission, the offering will be in common stock sold by current shareholders. The number of shares offered, and the price range for the shares, has not yet been released. Financial services company Credit Suisse Securities is handling the offering.

    According to a Bloomberg report, Neiman Marcus is expecting to raise around $100 million during the offering, an amount that could change as specifics about the offering are finalized. The company’s owners are valuing it at around $8 billion. Neiman Marcus returned $4.5 billion in revenue over the past year.

    Neiman Marcus was founded in 1907 and is headquartered in Dallas, Texas. Though the company has had many owners over its 100-year history, it was most recently bought in a 2005 leveraged buyout by investment firms including Texas Pacific Group and Warburg Pincus. Both firms are expected to sell stock in the IPO to reduce their ownership stakes.

    (via Bloomberg)

  • J.C. Penney Apology Ad Asks Customers to Come Back

    It’s no secret that J.C. Penney has been losing customers over the past year.

    The company hired Apple exec Ron Johnson as CEO and began turning the department store pricing model on its head. Instead of setting high prices with constant sales and coupons, the company instead decided to price its clothing at moderate to low prices and ditch the coupons. The strategy was a disaster, and J.C. Penney now finds itself with an estimated $3.5 billion in debt.

    Even though the company has ousted Ron Johnson and received billions in loans, the company has a long way to go to rebuild its image with customers. To that end, J.C. Penney this week released a new ad that is an explicit apology to customers who have abandoned the store.

    The ad, titled “It’s No Secret,” admits that J.C. Penney “changed” recently. It goes on to state that the company has learned from its mistakes, and will now be listening to its customers. It explicitly asks customers to “come back to J.C. Penney.”

    J.C. Penney also appears to be engaging with customers quite a bit more on social network sites such as YouTube and Facebook. The store is acknowledging customer complaints and revealing information such as the fact that the St. John’s Bay brand will be coming back to J.C. Penney stores.

  • J.C. Penney: $1.75B Loan Taken From Goldman Sachs

    In early April, J.C. Penny CEO Ron Johnson stepped down following over one year of dismal financial results at the company. Johnson had attempted to turn the department store business on its head, eschewing sales and coupons in favor of consistently lower pricing, but the company’s board was forced to make changes due to a plummeting stock price and an estimated $3.5 billion debt.

    It seems, however, that not everyone has written off J.C. Penney. Investment bank Goldman Sachs has issued a five-year $1.75 billion loan to the troubled department store. J.C. Penney stated that the funds will be used to fund “ongoing working capital requirements,” “general corproate purposes,” and part of its debt. The loan is secured by real estate and interest in J.C. Penney.

    “This loan facility is an important component of our strategic plan to strengthen the Company’s financial position,” said Ken Hannah, CFO of J.C. Penney. “Together with our revolving credit facility, this will give us the financial strength we need to meet our current funding requirements and build toward a successful future.”

    This loan is in addition to the $850 million that J.C. Penny borrowed from a revolving credit fund two weeks ago. The company stated that loan would go toward ensuring the company’s liquidity and to replenish inventory at its stores.

  • J.C. Penney: $850 Million Borrowed to Shore Up Inventory

    J.C. Penney today announced that it has borrowed $850 million from a revolving credit fund of $1.85 billion. The company stated that the money will be used to ensure the company’s liquidity and replenish inventory levels.

    “Earlier this year, we increased our revolving credit facility in anticipation of operating, working capital and capital expenditure needs, especially during the first half of the year,” said Ken Hannah, CFO for J.C. Penney. “As we near completion of the home department transformation in over 500 stores, we have been undertaking and will continue to experience a significant inventory build and increase in capital expenditures.”

    J.C. Penney CEO Ron Johnson stepped down last week after just over one year with the company. Johnson had attempted to move the retail company away from the modern department store strategies of constant sales and coupons. The strategy did not succeed, and J.C. Penney stock and revenue fell while debt rose. The company is now estimated to be more than $3.5 billion in debt.

    “While jcpenney has faced a difficult period, its legacy as a leader in American retailing is an asset that can be built upon and leveraged,” said Mike Ullman, who replaced Johnson as acting CEO. “To that end, my plan is to immediately engage with the Company’s customers, team members, vendors and shareholders, to understand their needs, views and insights. With that knowledge, I will work with the leadership team and the Board to develop and clearly articulate a game plan to establish a foundation for future success.”

    J.C. Penney’s pricing strategy has already begun to shift. The retailer is issuing coupons, and clothing prices are expected to rise in preparation for sales.