Can J.C. Penney pick itself up?
Firing CEO Ron Johnson does little to change retailer's bleak outlook. A buyout may be the only hope -- and that's quite a long shot.
Unfortunately for Penney, Johnson's tenure proved to be exciting for all the wrong reasons.
Johnson tried to do too much too fast. Shoppers reacted angrily to his decision to scrap discount sales and impose a confusing three-tier pricing system, which Penney later ditched, reinstating its old pricing system.
Many people fault Johnson for focusing too much on creating shopping "experiences" and losing sight of what matters most to consumers in uncertain economic times: prices.
Shoppers have fled the chain in droves, and it may be difficult to bring them back. Same-store sales, a key retail metric of locations open at least a year, are down more than 10% in the company's fiscal first quarter.
Shares of Penney fell more than 10% on Tuesday after news of Johnson's ouster came out late Monday. They have plummeted nearly 28% this year. Some analysts, however, see value here. The average 52-week price target on the stock is $15.39, about 8% above where it trades.
The stock is so cheap that it might even attract a buyout. But that may take some time, and it seems likely that the shares will fall further, which is why investors should avoid them.
Penney may not have learned from its mistakes. After all, it has named ex-CEO Myron "Mike" Ullman, who helped recruit Johnson, to replace the executive who proved to be a monumental disappointment. He faces a tough road ahead.
"Ullman inherits a customer base that, in our view, feels it has been betrayed, and he will be virtually powerless to prevent JCP from burning a substantial amount of cash in 2013,"
Reuters quotes PiperJaffray analyst Alex Fuhrman as saying.
That's not situation most investors would want anything to do with.
Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.
Having grown up buying at JCP, I found the changes attractive, but, felt the merchandise all geared
for the 'younger' woman. Pants below the waist, skimpy tops, etc. I hope they will cater to ALL
ages again. JCP has always been #1 to me and hope it will be again.
Too little ....too late, I'm afraid. They should have gotten rid of Johnson six months into it. He took an institution (albeit tired and stodgy...) and ran it into the ground all by himself.
I foresee JCP being sold in the near future.
Good riddance to that idiot, Johnson who thought he was the mesiah......
JCP is a icon in industry and sad to see one person can destroy the business. Ron J should leave JCP . but his 150M should stay in JCP stock until recover the loss. JCP should bring back the coupons, and the JCP low pricing that all AMERICAN are accustom to see at JCP
Thanks for your stay RON J, do right to JCP leave 1/2 of the millions in stock to show good faith in your plan that did not work. its not the same sale a product that people need like Apple products those sale by them self.
LET GO BACK TO THE AMERICAN BUSINESS by giving sale to the people without raising the product price so high that the regular buyer in JCP know the price is lower yesterday without the sale.
I have a JCP in the mall and I always find something to take home. Great prices and great merchandise. I know they will make a come back.
I hope that those who have left JCP give them another change. I'm 27 and back in the day, I considered it a dowdy old-lady store.... I never would have considered shopping there. Now, it's one of the first places I go. I really LOVE their new stuff. The Liz Claiborne line, the new JCP line and the Joe Fresh line are awesome. They've brought back some of their coupons and they have their clearance racks still - and you can get a GREAT deal on stuff. The one near me in Manchester, NH has definitely been getting busier since they've made the changes. It's bright, fresh, and affordable. Women my age need to definitely go check it out. :)
I have always loved JC Penny; going on 45 yrs of personal shopping experience. But, I have not been to one well over a decade because they are always one of the anchor stores in a mall. I hate malls, I will not go to them. They have also retreated from the more rural areas into cities, leaving most of us unable or unwilling to drive fifty miles for an unpleasant shopping experience.
I know that one can shop online but it is not the same as prowling the store for the great sales they used to have. Also, you cannot tell the quality of a product online. I would much prefer to go to a stand alone store. I know several people who feel the same way. I think the company needs to get back to their roots.
Whatever they are planning to do; they'd better act fast. There are many other retail stores to choose from.
The square advertising symbol (?) means nothing, visually.
The JCP weekly circulars will not bring me to the store or web site.
The circular (8/19/12) shows all young people with hideous hair styles (men) and the unshaven look. The clothes and the way they are worn show a complete lack of fashion taste, all aimed at the young shopper. School will be opened shortly, I know. I think your circulars should transcend all age groups since all age groups shop at JCPenney, after all, we all need clothes. I believe Mr. Penney started off that way, didn’t he? It’s strange that the generation that helped build the company are now left behind.
JCP made many mistakes over the years, one of which was moving to Texas. New York is the hub of the fashion industry. It was all there, the designers, the manufacturers, the sales people, showrooms for home furnishings, and photographers and studios. JCP severed experienced people from the move to Texas, experienced people that could have started the steam to start the engine so we could hit the ground running. Of course, some selected not to move, there was no incentive.
JCP Catalog, a good source of pictorial and factual information for the consumer…discontinued. The JCP web site cannot compete with the defunct publication. The JCP web site does not have the pictorial and illustrious quality of the catalog and it cannot compete with the volume of the catalog. The web site condenses the image to a couple of square inches. Check the JCP web site, under bed & bath, comforters and bedspreads, you find twenty-four photos on one page that are a couple of square inches each. I worked in JCP Catalog for about thirty years as an Art Director in Home Furnishings (bedspreads and drapes, etc.) and I know what it took to produce a photo that was a true representation of the product to the finest detail, color and composition and reflecting a handsome environment. Check the last A or R catalog and you will see what I mean. The computer screen is much too small to fully appreciate the merchandise. How is the return rate?
I believe the discontinuance of catalog was a bad decision. It was nice to pick up and browse through and to know it was always there on the table to stimulate a purchase or to get ideas, etc. instead of turning on a computer and straining one’s eyes on small photos and type.
I understand the problems of production and postage costs. It’s universal, but I would be willing to pay for the spring/summer and fall/winter books.
To sum it up..
Get rid of the SQUARE!
Bring back the BOOK!
Joseph A. Egrie
Former Associate, Senior Art Director Catalog Advertising.
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