Rival retailers could be the biggest beneficiaries of the demise of Sears Holdings.
Sears filed for Chapter 11 bankruptcy on Monday (October 15), gearing up to close 142 stores after decades of declining revenue and hundreds of store closures.
And analysts believe that JCPenney could be the biggest winner as a result, as the retailer has a store within a quarter mile of around 47 percent of Sears' locations, Gordon Haskett analyst Chuck Grom said in a note to clients, according to CNBC.
If Sears liquidates its business entirely, the firm expects JCPenney could get a boost in same-store sales of about 1.8 percent in fiscal 2019. In addition, Grom expects Kohl's, Macy's and Target to see an increase in sales, while Walmart, Lowe's and Home Depot should also benefit.
Analyst Cowen also anticipates sales at JCPenney stores open for at least 12 months to climb upward of 1.7 percent, as long as there is total liquidation of Sears.
“Key factors in driving [Sears] share gains will include distance to store, shopper overlap, product and brand assortment similarities, neighborhood similarities, and tactical promotional strategies,” Cowen analyst Oliver Chen said in a note to clients. “We believe the fight for share gains will be highly competitive,” he said, but there's always the chance former Sears and Kmart shoppers “could also just stay home and not shop for items that were more discretionary in nature.”
The predictions are no doubt welcome news for JCPenney, which has seen its share of recent struggles. Earlier this year, the company reported that it was cutting its workforce in a move that could save the company up to $25 million per year. The retailer is trimming 360 jobs, including 130 positions in its headquarters.
“Just as we conduct a review of our stores and supply chain operations each year, we continually evaluate the productivity of our home office structure to ensure that it efficiently aligns with the business,” the retailer said in a statement at the time. “Certain positions have been eliminated as a result of this annual assessment.”