Many American companies have been lauded for their rapid rise to greatness, a process that sometimes takes less than a decade. They become leaders in their industries, are renowned for innovation, phenomenal growth, and, in the case of public corporations, their soaring share prices. Google (NASDAQ:GOOG) and Apple (NASDAQ:AAPL) fall into this category. At the other end of the scale are well-known firms that are so crippled they go bankrupt or disappear entirely. Recently, these have included AMR, the parent of American Airlines, Borders and Eastman Kodak.
Somewhere in the middle — between the companies that do phenomenally well and those that fail — are ones that were once leaders in their industries but have fallen hopelessly behind. They may remain in business for years or even decades after their best days. Their executives struggle to find better strategies, and often their boards seek new management. But, in the case of companies that fall permanently into trouble and well behind the leaders in their industries, the chance of a turnaround has passed. Competitors have taken too much market share and often have stronger balance sheets. Or, their products and services are no longer in demand because of changes in the overall economy or the sectors in which they operate.
To compile this list of companies that were once leaders in their industries, but are no longer and likely will never be again, 24/7 Wall St. looked at S&P 500 companies that have lost most of their market share, suffered sharp share price erosion and posted a sharp drop in earnings, or even losses.
These are the nine once-great American companies that will never recover:
#1: J.C. Penney
J.C. Penney (NYSE:JCP), founded in 1913, counted itself among the primary retailers and catalog companies in the U.S. for decades. But under CEO Myron Ullman III, who took over in 2004, its revenue began to slide, dropping from $19.9 billion in 2007 to $17.3 billion in 2011. Earnings fell from $1.1 billion to a loss of $152 million in the same period. J.C. Penney’s share price has fallen almost 70% in five years. By way of contrast, the shares of direct competitors Macy’s (NYSE:M) and Target (NYSE:TGT) have been essentially flat over the same period. J.C. Penney has also been challenged by several other companies, including Wal-Mart (NYSE:WMT) and Costco (NASDAQ:COST).
Problems became so severe that J.C. Penney closed its formerly successful catalog business and reached outside for a new CEO. The board’s choice was Apple Retail Chief Ron Johnson, who was picked in June 2011. Johnson changed the company’s pricing structure, but the reaction was so poor that revenue dropped an extraordinary 20.1% to $3.2 billion in the first fiscal quarter. J.C. Penney posted a loss of $163 million. Internet sales, so essential in a world in which Amazon.com (NASDAQ:AMZN) has become a significant presence, fell 27.9% to $271 million. By contrast, Macy’s total sales, combining online and those made in stores, rose 4.3% to $6.1 billion in the last reported quarter. And Macy’s is hardly J.C. Penney’s largest competitor by revenue or workforce. Wal-Mart’s sales were $450 billion last year, while Costco’s were $89 billion.