These 3 New Year’s Resolutions Could Save J.C. Penney in 2014

What do J.C. Penney (NYSE: JCP  ) , Lululemon Athletica (NASDAQ: LULU  ) , and Abercrombie & Fitch (NYSE: ANF  ) all have in common (besides liking pina coladas and getting caught in the rain)?

They all had a really bad year.

For J.C. Penney, 2013 was a like a never-ending, terrible, horrible, no good, very bad day. Stockholders who held J.C. Penney on January 1, 2013 have watched the value of the stock fall by 67% as the share price hit a low of $6.42 in October.

This was due in no small part to the massive marketing blunder that former CEO Ron Johnson instituted in a misguided attempt to resurrect the already-ailing brand. By abruptly eliminating the brand's tried-and-true, discount-based promotional strategy, Johnson alienated an already shrinking group of loyal customers. This sent the company into a tailspin that resulted in Johnson's firing in the spring of this year, the company's reinstatement of Mike Ullman as CEO, and the company's ouster from the S&P 500 index.

This begs the question: Will 2014 be the best of times (or at least better of times) to 2013's worst of times? Or is this the beginning of the end for J.C. Penney?

Here are three resolutions J.C. Penney should adopt in order to make 2014 a better year:

Don't throw out the baby with the bathwater
Returning to Ullman was the safe move. Bringing someone familiar back to the helm resonated with alienated customers as the retailer reinstated promotions they have come to expect from the brand.

Johnson's strategies may have been too much, too soon for the retailer. Many of his marketing techniques, however, improve the shopping experience and they are appealing to J.C. Penney's customers when combined with the store's former discounting techniques. Returning to the store's over-cluttered, unattractive ads and stodgy merchandise would be a step backward.

J.C. Penney finds itself in a very similar position as Abercrombie & Fitch, which has seen its stock price plummet more than 50% over the last two years. Abercrombie has decided to stay the course with CEO Mike Jeffries, who recently signed a contract that extends his tenure until February 2015. The year 2014 could be a make-or-break year for this company as well.

Embrace plus-size shoppers
The average woman in the U.S. wears a size 14, which is considered the low end of the plus-size scale. Yet, plus-size women are constantly searching for affordable, attractive options when it comes to fashion, and they are often faced with "size-ist" attitudes among companies.

Former chairman of Lululemon Chip Wilson learned the hard way that women, both plus-size and otherwise, have power. After blaming the brand's spring recall on the shape of women's bodies instead of owning up to shoddy merchandise, Wilson was recently shown the door in the wake of a very public outcry from Lululemon's customers.

Companies like J.C. Penney should view this a s a public relations opportunity to win over plus-size shoppers with quality, stylish merchandise at affordable prices.

Keep courting younger shoppers
Johnson may have tried and failed to court younger shoppers, but that doesn't mean J.C. Penney should give up on attracting the youth demographic. In fact, a recent study performed by the NPD Group indicates that, surprisingly, the majority of millennial dollars are spent in-store. What's more, because young people are more likely to earn less money than their older counterparts, they are attracted to cheaper prices and discounts.

That's good news for retailers like J.C. Penney. Combining some of Johnson's more successful changes, like trendier merchandise and sleeker sales floors, with deep discounts and sales promotions could be the sweet spot for drawing in younger consumers.

3 stocks for your New Year's resolution to outperform the market
As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love. 


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

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.

Be the first one to comment on this article.

DocumentId: 2773417, ~/Articles/ArticleHandler.aspx, 4/20/2014 7:54:30 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

TREND TRACKER: Get Rich When the Web Goes Dark

It's time to say "goodbye" to your Internet! One bleeding-edge technology is about to put the World Wide Web to bed. And if you act right away, it could make you wildly rich. Experts are calling it the single largest business opportunity in the history of capitalism… The Economist is calling it "transformative"... but you'll probably just call it "how I made my millions." Big money is already on the move. Don't be too late to the party – find out the 1 stock to own when the Web goes dark.


Advertisement