Jcpenny's Bankruptcy Case Study

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In the wake of the financial crisis of 2008, many department stores struggled and were still able to remain in business while other department stores could not keep afloat and had to close their doors. By the end of 2008 the world 's major economies were in recession. This led to almost two million jobs lost in the U.S. This also resulted in the rate of unemployment rising to 7.2%. Due to the huge amount of layoffs taking place, the monthly income of families were dropping causing for dramatic cutbacks in consumer spending. November 2008 Americans began cutting back on credit card purchases and saving every dollar possible. Retail stores began to feel the impact this had as November brought in the lowest number of sales in the last 30 years.…show more content…
What did the this retail store do or did not do that made a huge impact on keeping their doors open? Annual reports will need to be obtained from JC Penny 's in order to gain an understanding of any profits or losses. This includes looking closely at financial plans and determining what cuts have been made and profits gained that prevented them from closing or filing for bankruptcy? The evaluation of JCPenny 's will begin with looking into financial reports dated back to 2006. Reports gathered from 2006 are important in gathering information before the recession took place and is valuable in order to figure out how much the store was affected by the recession. All information gathered will result in the finding of what JCPenny 's did to overcome the financial crisis of 2008 and what they will continue to do to avoid and prepare for any future financial…show more content…
JCPenny 's (JCP) had a successful year in 2006, they opened 28 new stores with the goal of opening 50 more the next year. They developed a new partnership with Liz Claiborne and had net sales of $19,903 million. This was an increase of $1,122 million from the previous year. In 2007 JCP had a slight drop in sales resulting in a 0.2% difference from the previous year in 2006. During this year, they took drastic measures to help secure the future of the company. The measures include: reducing staff, altered salary plans and, added easy online shopping. Some of the huge measures included the decision to open 36 stores rather the 50 they had projected in 2006. Due to the recession JCP continued to see a drop in sales. In 2008 reported net sales were $18,486 million. During this year they developed a strategy for controlling vendor orders and keeping inventory low. With this strategy they were 13.5% below 2007 levels of inventory. The Rodriguez 3 JCP Rewards incentive was launched as well as an additional 35 stores opened. Preparing for 2009 JCP created "Red Zone Clearance" a plan to sell and get rid of any inventory. They created systems for inventory flow and reduced expenditures from $969 million to $600 million. Despite another drop in net sales in 2009 to $17,556 million they continue to strategize and stay disciplined. In 2010 all the hard work begins to show some relief as the net sales rise just slightly to $17,759
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