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Like many retailers, J.C. Penney really struggled when the financial tornado hit consumers in 2008. The stocks of rivals Macy's (NYSE: M ) , Dillard's (NYSE: DDS ) , and Nordstrom (NYSE: JWN ) have since recovered, leaving J.C. Penney in their dust, as it struggles to get anywhere near the sales levels achieved prior to the recession. Today may be the day that J.C. Penney officially announced its turnaround story to the world.
World, meet the new J.C. Penney
Shortly after 11 a.m. Eastern time yesterday, J.C. Penney's stock began a vigorous climb higher, ending the day up 17.5% following news that it had hired Apple's (Nasdaq: AAPL ) head of retail operations, Ron Johnson, to be its next CEO.
Ron Johnson's stint with Apple wasn't half-bad. He was hired in 2000; the first Apple store opened in 2001 and Apple has increased the number to more than 300. As of last year, Apple's stores accounted for approximately 15% of its total revenue. Not bad, right? Actually, it's phenomenal, and that type of growth is enough to potentially make Apple cringe to see him go elsewhere.
J.C. Penney has been struggling to find a catalyst in the midst of a retail environment filled with increasing price competition and a growing Web presence. Penney's Web presence, for lack of a better phrase, is still in its infancy, so Johnson may be just the person needed to integrate new technologies into the company to help streamline its online division.
Another area where Johnson excelled was in understanding his competition. Retail is all about inventory control and getting your pricing and product correct. With Johnson having worked in technology for so long I can't guarantee that he'll be able to tell you what fashion trend is going to be this season's winner, but I can assure you he has a keen knowledge of controlling inventory and making his product the product to own.
J.C. Penney shareholders have good reason to be excited about the news. I can't say that I'd be excited to buy in after such a large run, but thinking long term, J.C. Penney has to have moved up a notch on many people's charts.
The 800-pound gorilla
Of course, now we need to sit back and wait for Johnson to deliver tangible results. There's a reason brokerages tell you that past performance is no guarantee of future results, and this is it. Penney's has a lot of catching up to do, and clothing retail is a completely different ballgame than technology. Only time will tell if J.C. Penney can complete its turnaround, but without a doubt it landed an 800-pound gorilla today.
Do you have more confidence in J.C. Penney than you did last week, knowing that Johnson will soon be at the wheel? Let us know by posting your thoughts in the comments section below. Consider adding J.C. Penney to your watchlist to keep up on the latest news in the retail sector.