You have probably read a lot of news about Sears Holdings (NASDAQ:SHLDQ), J.C. Penney (OTC:JCPN.Q), and Macy's (NYSE:M) recently. If that's the case, then you have been reading a lot of negative news for Sears and J.C. Penney, and a great deal of positive news about Macy's.
While key metrics are important, if you want to see if a company is likely to show sustainable growth in the future, then you should also look at its company culture. Happy employees tend to produce more, and they usually offer better customer service, which keeps consumers coming back. Unhappy employees often feel resentment toward their employer. This leads to many employees going through the motions and offering subpar customer service, which leads to fewer sales. Therefore, you wouldn't want to invest in that company.
Company culture performance doesn't guarantee future results, but it's an important piece of the puzzle, and a factor that every investor should consider. The results below, based on anonymous employee ratings and reviews of their employers on Glassdoor.com, are certainly interesting.
Not a long-term option
Sears employees have rated their employer a 2.6 of 5 (based on 1,565 ratings), which is subpar. More concerning is that only 30% of employees would recommend the company to a friend. Of the 10 most recent anonymous employee reviews, one of them was especially scathing and potentially telling: "I'd never be dumb enough to think of this place as a long-term option. They probably won't last another five years."
Also, of the 10 most recent reviews, five employees answered the question of whether or not they were optimistic about the company's future. Only one of them said yes. The other four said no.
The biggest employee complaints: high-pressure sales irritate associates and customers, micromanagement, and too many managers. It was also mentioned that iPads don't work half the time and that no one is impressed that Sears employees are using them.
One positive mentioned more than once: flexible scheduling.
It should come as no surprise that the company culture is poor at Sears, which could be indicative of a company that is giving up, or at least going downhill. But J.C. Penney's company culture might surprise you.
J.C. Penney employees have rated their employer a 3 of 5 (based on 1,453 ratings). Only 46% of employees would recommend the company to a friend, but many of these ratings might have come from when Ron Johnson was in charge. In fact, of the last 10 people leaving ratings and reviews, four of them answered the question of whether or not they were optimistic about the company's future, and all four answered yes.
The biggest negative reported by J.C. Penney employees was that it's mandatory to work some nights and weekends. However, there have been far more positives recently. These include pay/benefits, hard-working coworkers, a positive atmosphere, a professional environment, quality training, generous employee discounts, and easy communication with management.
Could this be one area where J.C. Penney outperforms Macy's? If so, investors might want to take note of it.
Positives outweigh negatives
Macy's employees have rated their employer a 2.9 of 5 (based on 3,148 ratings). This is slightly lower than J.C. Penney, but 48% of employees would recommend the company to a friend, which is slightly higher than J.C. Penney.
It appears to be somewhat of a draw between Macy's and J.C. Penney when it comes to company culture. However, of the last 10 people leaving reviews, four of them answered the question of whether or not they were optimistic about the company's future, and only two of them said yes. This is a small sampling. Take that into account. But it's still worth noting.
The biggest negatives reported for Macy's were the need for more interactive training and the company being more focused on selling credit than merchandise. Positives outweighed negatives by a wide margin, including an upbeat environment, advancement opportunities (if you work hard), flexible scheduling, employee discounts, a good work/life balance, and friendly coworkers.
What does it all mean?
The Foolish takeaway
What we can learn from this study is that Sears has a company culture that's failing, which seems to go hand-in-hand with the current public perception of the brand. This is concerning in regards to the long-term outlook for the company. In other words, it's one of many reasons that you might want to avoid Sears as a potential investment option.
Though facing steep challenges, J.C. Penney has an average company culture, which is better than what most people would expect. This might be one indication that J.C. Penney has a better chance at a turnaround than Sears. However, this doesn't mean J.C. Penney would be a good investment at this time by any means. J.C. Penney is still highly promotional in order to increase traffic and sales. Therefore, sustainable profitability will be difficult to achieve.
The company culture at Macy's is also average, which is good enough for a retailer. Macy's doesn't have to worry about turning itself around at the moment, and the woes and store divestitures of Sears and J.C. Penney are only going to help Macy's see market-share gains. This might act as a positive catalyst for Macy's.
Macy's is likely to present a better long-term investment opportunity than Sears or J.C. Penney, but please do your own due diligence prior to investing.