J.C. Penney: Does Going Gay Make It a Buy?

TheStreet.com

NEW YORK (TheStreet) -- As lame as I consider Ron Johnson's turnaround strategy at J.C. Penney JCP , I still respect the guy's pluck. He has more guts than I do, comparing JCP to Apple AAPL pre-iPod.

While I do not know his intent, I applaud the recent decision, presumably by Johnson, to run an ad featuring a gay male couple with children. Though Yahoo! Finance covered the story late last week, mentions of it appear scant throughout the rest of the financial media.

Maybe "we," speaking as part of some loose collective, do not think this marketing strategy bears any relevance to the stock. Or maybe Reuter's Felix Salmon was correct last year when he wrote about Apple CEO Tim Cook's sexual orientation:
As the Apple story moves away from being about Steve Jobs and becomes much more about Tim Cook, we're going to see a lot of coverage of Cook, the man. He is, after all, not just one of the most powerful gay men in the world; he's one of the most powerful people in the world, period. The first instinct of many journalists writing about Cook will be to ignore the issue of his sexuality ...
There's no ethical dilemma when it comes to reporting on Cook's sexuality: rather, the ethical dilemma comes in not reporting it, thereby perpetuating the idea that there's some kind of stigma associated with being gay. Yes, the stigma does still exist in much of society. But it's not the job of the press to perpetuate it. Quite the opposite
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Amen, brother.

When it comes to homosexuality, we would rather just ignore the issue, or deem it irrelevant, particularly in the cozy confines of the financial media. But if gay marriage can become a defining issue in a political campaign, how can we argue that a major corporation broaching the subject in its marketing will not, at some point, impact the business as well as the brand and, eventually, the stock?

Did Johnson Pull an Obama?

Four years ago, I lived in Hollywood. Despite my tendency to lean left politically, the number of do-gooders driving down Sunset Boulevard in their Subarus and Priuses sporting Hope and Change bumper stickers made me want to vomit.

Over the last four years, Obama lost the anti-war, pro-gay left by doing a whole lot of nothing in the White House. Now to win them back, he flip-flops on gay marriage. So pathetically transparent.

J.C. Penney makes a similarly transparent move, but I don't think it's pathetic. In fact, I commend a major American corporation, particularly one that's as much a part of the old guard as any other, for coming out on such a divisive issue. It's about freaking time.

Ron Johnson knew exactly what he was getting J.C. Penney into. And he was more than happy to get them into it . . . again. Conservatives were not happy when J.C. Penney decided to hire (and keep amidst pressure) Ellen DeGeneres as a spokesperson. The two-dads ad merely reignites the controversy. However, don't brand the move as just a publicity stunt. I think it runs deeper than that. Johnson needs to reimage and completely transform J.C. Penney, if he wants to truly differentiate it from other retailers, particularly big box chains such as Target TGT and Wal-Mart WMT , as well as fellow mall lessee Macy's M . This move helps bring this very long-term process along.

Macy's has made similar waves, found itself under fire and subsequently defended its decision to "embrace customers of all ... lifestyles." Johnson did likewise. And the public response, at least across the Web, has been, by and large, positive. From the above-cited Yahoo! Finance story:
One person wrote, "I haven't shopped there in years. I'm about to change that!" Another posted, "Kudos JCP. If I can get over my disdain for malls, I just might have to stop by your store now and then." A Gawker commenter wrote, "I'm pretty sure J.C. Penney did this on purpose to get more attention. Before the whole Ellen thing, when was the last time you heard about J.C. Penney, other than the fact that they were failing. Now they're getting all this free press. Smart move JCP!"

In my recent bearish pieces on JCP, I chide the image of the stodgy department store anchoring the soulless suburban mall. How in the world do you transform a franchise so entrenched in sterile mediocrity into something unrecognizable to itself? I'm not sure it's possible.

But image is everything. And, if Ron Johnson can continue to push the envelope and turn JCP's image into a cool, hip one that appeals to the so-called "creative class," he might have a fighting chance at success.

The support of same-sex couples, which, although not explicitly stated, translates into a "YES" vote on gay marriage, will not, in and of itself, turn JCP into the young-leaning, hip new-era department store it needs to be. However, Johnson might just be setting up this angle as part of a larger plan to reposition the company.

For a long-term investor, it's a work in progress worth keeping an eye on. If Johnson can craft perception at J.C. Penney the way he and Steve Jobs did at Apple, this story could flip flop from tragedy to triumph in no time.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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