We all want to see results, I get it. But J.C. Penney (JCP +0.00%) has gone from a company that wants to build something into a company that wants to just have something, it seems. Recent reports have put new CEO Mike Ullman back out on the mean streets with a new CEO on the way.
Bill "The Infuriator" Ackman, who pushed so hard to get Ron Johnson in the CEO seat, now wants to put some other sucker in place. He's sweetening the pot by bringing back yet another old-timer, ex-CEO Allen Questrom. If Questrom likes the new CEO pick, he'll grace the board with his presence as chairman. Thanks, Bill.
The underdog usually loses
J.C. Penney has reached that odd state where everyone seems to see the conclusion of the story except the people who are in the actual story. Once again, the stock reacted with odd violence to any news regarding the company, and jumped 7%. But why is unclear.
In J.C. Penney's defense, Ullman was always going to be a filler CEO. Ackman's letter to the board -- obtained by CNBC on Wednesday -- cited the lack of a permanent CEO as part of the problem that's been pulling the stock down. Luckily, he's got a clear vision for just the kind of person that J.C. Penney needs -- and who knows better than Bill Ackman? For the record, in 2011 Ackman referred to Johnson as "the Steve Jobs of the retail industry."
Where is the floor?
The problem with J.C. Penney -- qua investment -- is that there simply is no meaningful plan. Or, for the few months in which there is a plan, it's a bad plan. Johnson had plans, but none of them appealed to the J.C. Penney consumer, so they just lost money. The board had plans about getting cash, but it required putting the only thing of value that the company owns -- its real estate -- up as collateral. In short, J.C. Penney hasn't been great with planning.
How are investors supposed to know when this thing hits the floor? Over the last 12 months, the stock has ranged between $32.55 and $12.50. I still have no hope that this is the end, as sales have continued to slide. Last quarter, comparable-store sales dropped 16.6% year over year. Even if that slows, it still means that sales are falling.
The potential to turn the business into a real estate trust of some sort is currently on hold, due to the $2.25 billion term loan that the company took out. With no clear plan, no backup plan, no leadership, and no customers, I can see no reason to give J.C. Penney another chance.
