Feature article on the Fool with three opinions and nobody can manage the slightest disagreement? All three bearish?JCP is trading at 0.3 times sales. That's compares to peers ranging between 0.6 - 1.0 on that metric. So plenty of weakness is already priced. A pretty healthy risk of total failure is priced in, in my opinion.That valuation is based on pretty depressed sales, down about 35% over the last year. Put that together, and you have to assume that if JCP managed not even a successful turnaround, but just even to undo the damage it has done to its sales volume over the past year, you would have nearly a 50% increase in sales and probably a doubling in price/sales, which would leave you with a price of about $45 to $50 in a "success" scenario over the course of the next two years or so.JCP doesn't have much good going on at the moment (as you might suspect), but it does have pretty substantial improvement in merchandising. Clothing lines have seen vastly improved and modernized design focus, which alienated many consumers over the past year but seems to be earning the brand higher awareness and acceptance in younger demographics and online.Calls at an $18 strike price for January 2015 last traded at $4. Imagine that there were only two scenarios -- total failure or return to old sales figures. Total failure, you lose $4. Return to old sales figures, price may go to $45, you make $23. So the market is pricing the chance of a return to old sales figures over the next two years at a very low probability, about 15% prehaps.Of course that's an oversimplification, but it's also an indication of just how much terrible is already priced into current valuations. I like those calls as a way to limit your losses in this falling knife situation, because there is truely no guarantee that the underlying shares will be worth more than $0 in two years time.
I always thought JCP and Macy's were competitors but stock wise it has been a huge difference. Over 2 yrs Macy's is up 80+% and JCP is down 60+% while the SP500 is +20%.As a single guy I don't spend much time at either one but if I was clothes shopping and didn't go to Kohls, Macy's would be my second choice. JCP I only used for curtains but find it easier to buy those online.I have a friend that works in HR at a Macy's office and she has said things are booming. They have started "seasonal" hiring months earlier this year than any time in the past.We'll see how long this divergence continues. Personally it wouldn't surprise me to see JCP gone (or at least its name) in a few years like Robinson-May and Hecht's (although I think both of those were much smaller chains).Rich
"I always thought JCP and Macy's were competitors but stock wise it has been a huge difference. Over 2 yrs Macy's is up 80+% and JCP is down 60+% while the SP500 is +20%."Well, this is the "falling knives" board."Personally it wouldn't surprise me to see JCP gone (or at least its name) in a few years like Robinson-May and Hecht's (although I think both of those were much smaller chains)."Agreed, but a very substantial probability of this is already priced in. For a value hunter who sees this as a reasonable possibility I think the calls are the way to go.
I've posted about JCP here a few months back. Totally agree, this is a binary result - either they make it or not (not counting on outside takeover scenario - but obviously this will only happen if stock price is down the toilet).There's kind of a big bet on Joe Fresh, which is their push of the store within a store concept. Some say this is a make or break for JCP. I'm not a gambler by nature and therefore I feel that Ron Johnson's strategy is too much of a gambit. Think of it this way: 1) They stopped sending out sale coupons 2) People stopped shopping at JCP 3) They revamped stores, 4) People still not coming back in droves.=> What do you do? Obviously, you backtrack on what you did that stopped people from coming. START SENDING THOSE COUPONS for crying out loud. When they get a feel of the new JCP remodel, then maybe you can reduce the sales coupons.ibarz- down 15% on JCP
What's interesting to me is that their Sephora, Izod, Levis are doing really well. Until recently, I had not seen a JCP promotion of these brands. A couple of weeks ago I saw an ad for the JCP Levis Bar. These are three brands that I started buying at JCP in the last year - always a great price, always in-stock. I had not shopped at a JCP in 15 years prior. This makes me realize that they need to attract a whole new customer. Take the Happy Chic line, as a key example - very hip and exactly what a young, single would want. Maybe the old "family shopping" image is off. But, what are they doing to introduce their new brands to these shoppers?cautiousone
Attracting new customers is always more expensive than keeping the ones you have. I don't shop much but it appears the stores have a fresh look.So why don't they go back to coupons? It seems like an obvious step. When the old customers come in they probably will like the store. I imagine the answer to why they don't at least take a step back to what worked before lies in CEO ego. It's hard to say "I was wrong" . Though great CEO's like Steve Jobs can say something is stupid at 3 PM and by 4 PM change his mind.They can go after all those mysterious new customers when they start making money. Won't young singles shop where they can find what they like even if they see a few "family" types in the store?Personally I despise coupons, give me good prices all the time, and I don't mind a sale now and then.
CEO egoSad, but that might be true.One thing to note - this guy is from Apple and was instrumental for the Apple Store's success. When have you ever, I mean EVER seen a discount coupon for the apple stores??? Never, is the answer. I hope Ron Johnson realizes that Apple had a strangle hold of the market, with virtually no competition for a long time. I can buy Levis anywhere.Coupons are very important, especially the older generation. My mom used to drop off the JCP coupons she gets in the mail and tells me to buy a new shirt. It's that attractive. She has not shopped at JCP every since they stop sending out the coupons. Their prices are attractive no doubt, but if the customers doesn't even go in your store, they won't know.
This just landed in my inbox - great details on the transition to catering to a hipper customer.http://www.retailgeeks.com/wp-content/uploads/2013/03/2013_0...
What do you do? Obviously, you backtrack on what you did that stopped people from coming. START SENDING THOSE COUPONS for crying out loud.http://reg.jcpenneyem.com/c/s/tagfrm/hAAAAAAAFtjc1B8xVKJAAAA...http://www.jcpenney.com/dotcom/jsp/browse/department.jsp?con...http://www.jcpenney.com/dotcom/men/brands/stafford/cat.jump?...
Whoa!Donja KNOW that the "Joe Fresh" campaign is gonna solve EVERYTHING!sunraya man who previously shopped @ JC Penney
I agree that they have started to reverse on their no coupon/no sale everyday low price strategy, but I don't think it's aggressive enough. Kohl's send email and mail coupons more than 2x per week. Bed Bath has their 20% off coupons constantly. I have seen the JCP coupon online, but has not seen one mailed for almost a year now.I have not lost my faith in JCP (actually I don't want their CEO to be replaced). I just hope that they tweak their revamping accordingly. He's done a lot of good things, especially at the JCP HQ.
http://finance.yahoo.com/news/heres-done-apple-guy-now-13040...=> Right on the money article differentiating Kohl's approach and JCP's. The answer is probably in the middle, Ron Johnson's approach was right, execution was awful.
I'm out. Not that I can't handle a 20% loss, but removing Ron Johnson at the middle of their revamping is a step back. Putting back the old CEO that you replaced because of poor performance is a bit ridiculous.
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