Dead Store Walking?

At what point is it better for investors, managers, other employees, and even customers for an organization to just call it quits? JC Penney, the venerable and once powerful American retailer, has been on a decades-long downward spiral of staff reductions, store closings, and bankruptcy reorganizations. Now it will merge into Sparc Group, the owner of a raft of struggling mall brands, including Forever 21 and Aéropostale, along with Eddie Bauer and Nautica. One analyst told CNN that the strategy behind the venture is to consolidate struggling brands “with the aim of creating something greater than the sum of the parts.”

Hmmm. Nice goal, but where is the strategy? How is it that Sparc, itself renaming as “Catalyst Brands,” will do anything other than prolong the agony (not to mention the cash hemorrhage)? Mall operators are vested in keeping stores open rather than having would-be shoppers walk past acres of unoccupied space; hence, much of the money behind Catalyst is coming from them. It still seems like this is throwing good money after bad with no path to sustainable solvency. Would it be better, even if traumatic, just to pull the proverbial plug?

We see the same thing in education, where dying and no longer needed institutions stumble along, burning resources until they collapse. When it comes, the collapse always seems sudden—as it will with the brands Catalyst owns—but when viewed from some distance is long overdue.