Why Macy's Is Laughing at J.C. Penney's Turnaround

J.C. Penney (NYSE: JCP  ) has come a long way since the depths of 2013, when many pundits were assuming the company was just months away from bankruptcy court. Since then, the struggling department store retailer has managed to stem the tide of sales losses and, in its most recent quarter, actually post same-store sales gains and an expansion of its gross margins. Despite this progress, the company has a long way to go in what will likely be a multiyear turnaround --assuming it is successful in returning to profitability. As if that weren't enough, J.C Penney may find itself faced with an even greater challenge in the years ahead: irrelevance.

As Motley Fool consumer goods analyst Sean O'Reilly explains, even if J.C. Penney manages to mount a turnaround, its greatest challenges may be waiting around the corner thanks to several initiatives being put forth by its top competitor: Macy's (NYSE: M  ) . 

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  • Report this Comment On July 15, 2014, at 5:00 AM, Roddy6667 wrote:

    She didn't want to be the Captain of the Titanic.

    JCP has issues that even Wall Street analysts can't see. A huge one is their supply chain, the huge machine that gets the merchandise from China/Vietnam/Cambodia.Bangladesh to the customer in the mall. That machine is old and inefficient. The computer system that runs the store distribution centers operates on 1982 software. Not a typo. They can't get new blood into the supply chain because the management is firmly entrenched and just trying to make it to retirement. A lot of them worked their way up from unloading trucks and have no business being in management. They have never seen another company's supply chain operation, so they don't realize how antiquated they are.

  • Report this Comment On July 15, 2014, at 9:19 AM, jallardcol wrote:

    I think that saying Macy's is laughing may be a little exaggeration. We noticed recently that Macy's has introduced a service they did not have until JCP's resurgence. Macy's just started shipping to store "free", which JCP has executed flawlessly for years. That tells me they are feeling some heat from JCP. Macy's service is however less than customer friendly. If you don't print your "online" receipt and bring it with you, it may take up to half hour for them to find your item, as my wife and I recently found out. Printing is so 1980's. So you see, the 1982 technology still works. New technology improves things, only if they work.

  • Report this Comment On July 15, 2014, at 9:22 AM, jallardcol wrote:

    Roddy667, I wonder how you know so much about the JCP staffing and systems. Care to elaborate to add credibility to your statements?

  • Report this Comment On July 15, 2014, at 2:34 PM, Roddy6667 wrote:

    I retired from JCP a year ago. Sad to see an old company go under, but they haven't kept up with the real world. You can walk into a store and see what looks like change, but you can't walk into an SSC that supplies every item sold on the East coast. It's state-of-the-art 1982, with too much manual labor and inefficient product flow. The cost per unit is too high, and that is a big reason why JCP can't post a profit. Well, that and the staggering amount of debt that has to be serviced.

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Related Tickers

8/31/2015 4:01 PM
JCP $9.11 Up +0.17 +1.90%
J.C. Penney Compan… CAPS Rating: *
M $58.61 Down -0.39 -0.66%
Macy's, Inc. CAPS Rating: **