I respect the fact that they are trying something so dramatic. Doing business as usual was surely a one way street to oblivion. I will go out of my way to buy something in JCP while Christmas shopping as a show of respect for their efforts.
The mistake RJ made was he should have dome the dept changes a little at a time with out doing away with the promotional part of pennys untill 40% of the stores had the new model, but he moved to quickly???????????????????????????????????????????/
That's great to hear! I've had friends and family tell me that jcp was just never a store they thought about shopping, but have seen the "new" look and are very impressed. I personally LOVE the new jcp, but just don't know if Wall Street will hang on long enough to let it catch on.
They won't? Wall Street has nothing to do with the success of JCP. Ackman controls the company and his fund has plenty of capital to help JC Penny through the transition to JCP IF JCP NEEDS IT. Not long ago the papers and media were full of thoughts on how Sears was near BK, etc. Sears is doing fine and giving off little pieces where are very valuable yet the base Sears stock keeps going up EVEN after spinning off little pieces of the company. Lesson;' don't believe what the nay sayers say about these old companies. They are full of asset value.
JC Penny is transforming into JCP. Johnson has done a superb job with the new JCP but has not with the old JC Penny. But the losses have been very moderate WITHIN the whole of JC Penny's financial position.
The portion of the stores converted to the new JCP are doing absolutely great...off the chart great but they are only 11% of the floor space. The online stinks. But it looks like Johnson has decided that he has to compete with showing discounts somehow. NOt the old coupon way, but some way since shoppers are so welded to bargains which show comparative pricing.
The disaster we see today at JC Penny will be the transformation of the department model in the future. It will far more profitable.
As for the financials; they will have an unused $1.5 billion line of credit at the end of the year plus $1 billion in cash.
And the worst case: the transformation doesn't work. What then? Will JC Penny go bk? No; they will either liquidate the considerable asset base which is worth lots more than the current stock market price, or resume with the old discount model under a much lower overhead and with the most up to date technology within the entire department store world.
But there could be more short term pain ahead...I have no idea what the fourth quarter holds but starting with the second quarter of next year we should start to see very considerable results.