J.C. Penney Lands an 800-Pound Gorilla

J.C. Penney (NYSE: JCP  ) shareholders have been waiting a long time for something to really cheer about. Today may finally be the day they can pop open that Champagne.

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.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong. The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Apple, and creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy that never makes you wait in line.


Read/Post Comments (2) | Recommend This Article (5)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 16, 2011, at 1:59 AM, PostScience wrote:

    Meh. A new CEO won't make JC Penney cool.

    To quote Warren Buffet:

    When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is usually the reputation of the business that remains intact.

  • Report this Comment On June 17, 2011, at 1:30 AM, sucker11111 wrote:

    Neither JC Penny shareholders nor the writer know in Apple, Johnson doesn't control the product to be sold, the inventory nor logistic. He takes care the store, staff...in another word, he implements. People buy the image, the product but it is not the same as selling grandma's underwear which were made by somebody else. The name JC Penny already is a bad name to begin with, but it can't compete with 99c, Dollar nor Walmart. The writer uses Macy to compare with JC Penny is like comparing apple to oranges. JC Penny always copy Sears in the past. It will fold just like Mervyns & Mogomery Wards. Everyone gave too much credit to Johnson, or Steve Jobs...

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