J.C. Penney Company (NYSE:JCP) has been all over the news lately. However, let's face it, it's for all the wrong reasons. As explained in this article, the company appears to be on a downward spiral that could, just possibly, lead to bankruptcy if it cannot turn its business around. However, in an attempt to lighten the mood a bit for investors who are hurting from the company's share price decline in recent months, I decided that this little list of notable facts that most of us probably don't know would do the trick.
J.C. Penney helped launch the career of this industry giant
Every once in a while, you read about someone who worked for a major corporation or individual and who was so inspired by their experience that they decided to strike out on their own and achieve success in the process. Such is the case with J.C. Penney and a young Sam Walton.
In 1940, at the tender young age of 22 and following his graduation from college, Sam Walton began work as a management trainee at J.C. Penney in Des Moines, Iowa, where he would earn $75 a month. Although his employment at the company was short-lived (he quit in 1942 to pursue military service), his experience there set the stage for future ventures into the retail industry, the culmination of which created Wal-Mart Stores (NYSE:WMT), the largest retailer in the world with a market capitalization of $244.7 billion and sales of $473 billion as of 2012.
J.C. Penney's founder made history – literally!
It cannot be denied that J.C. Penney's founder, James Cash Penney, had an indelible impact on American society. Regardless of what may befall J.C. Penney in the years to come, the fact that the company grew so large affected society and the American economy in immeasurable ways. However, it's one thing to impact society, but it's another to be recognized for it.
This happened in 1978 when the J.C. Penney Historic District was declared a National Historic Landmark District by the United States government. Located in Kemmerer, Wyoming, the J.C. Penney Historic District includes several places that had a strong association with the company and its founder. Primary among these is the Golden Rule Store, the store that became known as the first J.C. Penney. Another notable landmark within the district is the J.C. Penney House, which served as Penney's home.
Business boomed in the 80's and 90's
Perhaps the pinnacle of J.C. Penney's success came about during the 1980's and 1990's. During this time the company expanded rapidly, but not in the form of increased locations. Rather, it branched out into numerous lines of business such as online retail in 1983 (yes, you heard that right! 1983!) through Viewtron videotex. In addition to being an early online retailer, the company expanded into the banking and television industries.
The company's banking operations commenced with its acquisition of the First National Bank of Harrington, Delaware in 1984. Immediately following the acquisition, the company renamed it JCPenney National Bank. The purpose behind this strategic purchase was so that it could issue its own Visa cards and MasterCard cards, an idea that would be expanded a year later to include American Express cards. The company's television endeavors wouldn't take form for a few years after that, with the JCPenney Television Shopping Channel appearing on cable systems in 1989.
There's not usually anything particularly wrong with a company divesting itself of certain assets from time-to-time. In fact, doing so can be beneficial for the company itself, the divested assets, and shareholders. The divestment typically grants the company some amount of cash and the ability to focus on its core business. J.C. Penney understood this early on, as demonstrated by its many divestitures.
One of the earliest noteworthy examples can be found by looking at its decision to sell off its automotive repair shops to Firestone in 1983. In addition to selling off its automotive operations, the company elected to sell its direct-marketing insurance operations to Aegon in 2001 for $1.3 billion in cash. An even larger divestiture involved the sale of the company's pharmacy business, Eckerd, in 2004 primarily to CVS Caremark. As part of the deal, CVS would receive a bulk of the assets divested in exchange for $4.52 billion (which still resulted in a loss for the company), a transaction that would grant J.C. Penney considerable cash. A couple years later, in 2007, Rite Aid acquired some of the remaining stores. Finally, in 2011, the company decided to exit its catalog business as an effort to turn itself around following a failed restructuring of its business.
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