Conference calls in the Twilight Zone
The management of JCPenney and Groupon failed to address how bad things are.
The ratio of reality to fiction got some real outliers Wednesday, the conference calls after earnings from J.C. Penney (JCP) and Groupon (GRPN).
These two calls, which came after some not-so-hot quarters, had the least grounding with how things are really unfolding at these companies that I have heard so far in 2013.
Groupon's amazing. There was no sense whatsoever -- at least in the call -- that things are slowing and that international is a real Achilles' heel. When you have a giant guide down, you lead with it, you don't bury it. Your credibility is shot the moment you DON'T bring it up and then say how you will address the mistakes and the problems. You are just off the rails when you say a terrible quarter is a great one and a hideous outlook bodes well for the future. Both occurred in the Groupon call and it was a head scratcher, to say the least.
J.C. Penney leads with the best things that are happening instead of saying how it can survive with comps down 30%. As Michael Exstein from Credit Suisse said in his "sell" rating summary, this was a "beyond worst case scenario quarterly result."
I think that the salient issue is not if the turn is working, and CEO Ron Johnson insists that it is, but how it can still work and why it is not having an impact on the comp store numbers. I tire of hearing how this product line or that product line can make a difference and instead I want to know how the company could turn off so many of its traditional customers and why they don't care about the new assortments.
Plus, let's be honest, if Johnson wants to succeed he has to change the name of the enterprise. Yes, the whole enterprise. Scrap the name J.C. Penney. I am not kidding. First, the old customers seem to have turned against Penney even as the turn is going on. So you have lost them already. Second, the new lines of clothes and soon the new lines of home goods are dead on arrival because they are actually sold at J.C. Penney, where people seem to know, instinctively, not to shop. For example, if you buy one of the new Joe Fresh selections, a very attractive line of clothes at J.C. Penney, and tell someone who compliments you and asks you where you got that dress, and you answer "I got it at J.C. Penney," that person will say, "oh." And then they will not even think of going because "who shops at J.C. Penney?"
You change the name maybe people will be confused and go.
Penney's in the same position GM (GM) was against Toyota and Honda many years ago. GM thought it could either reinvent and lose its core older customers or it could just stay the way it was, keep that old customer base and let the Japanese have the newer consumer. In reality that was a false dichotomy and GM didn't need to side with one generation. It just needed to be creative and satisfy both.
- Also see: 'Mad Money' recap: I told you so
Johnson has simply failed to figure out a way to do that. And that's why it's probably time for someone else to try before it is too late because I have never seen any company come back from down 30%-plus comps. He has to own up to how he can and why the company is viable before he talks about how he is succeeding when he isn't.
I love conference calls. I love managements who start with "OK, numbers bad, here's why numbers bad, here's how we will fix it."
I do not like managements that start out talking about how good the numbers are when we all know they are terrible and then proceed to tell you how things will just get better and better when they are actually getting worse and worse. Those are the managers of stocks I want to sell. Those are the managements, alas, who need to be replaced because they just don't get it and probably never will.
Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust and has no positions in stocks mentioned.
More from TheStreet.com
While the Dow was up 1.26% yesterday, it was done on very little volume, a clear warning sign. We saw just 107 million shares trade hands - a mere fraction of what it should be if there really is even a modicum of confidence out there. Big moves on low volume are a strong indication that things aren't as they appear. It also historically has indicated a shift in momentum. Buyer beware.
cramer should change his name to historian.... since he tells you what has already happened.
he calls this rigor or "his work".....anybody can tell you what has already happened......the genius of cramer is he gets paid for telling you what you already know
Note that he doesn't hold Obama to the same standard.
sPEAKING OF THE "tWILIGHT zONE"....Could this guy be the new Rod Serling ??
I gotta learn to switch off caps....
ABS......See you are awakening ?? Riding that Darkie Train again, as usual; Right Cretin.??
You're not taking enough Meds in that coffee, do I need to call, Ms. Soetoro ?? again...
Was writing in CAPS, because I have been trading this morning early...Strike while the iron is hot, and the meat is rare...Even caught CGT1 off guard...He thought I was a manipulator....??
Not a word about a billion in loans from taxpayers, NEVER to be paid back.
Hey Kramer , the LA Times monkey that picked stocks as well as you ?
Let HIM write the articles for you , too
When a business can just put a coupon in Valpak for pennies and reach whole cities each month, Groupon was DOA the day it came to be.
JC Penny, stick a fork in it, give the CEO his golden purchute and call it done.
Waiting 2 days for a good laugh.
I'd LOVE to see the minor accomplishments too !
What a tool !
"record profits" What a joke.
GM's alive (No-- the UNIONS are alive, unfortunately)
Bin Laden's Dead ! (Thank you Bush/Waterboarding
Anything over 4% is way too high for growth but this media will parade an imposter around after 96 straight months of 8% UE ?
Copyright © 2014 Microsoft. All rights reserved.
Remy Cointreau says it was 'adversely affected' by China's anti-extravagance policy.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.