J.C. Penney (JCP) Retreat on Prices May Cost Company the War
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Shares of J.C. Penney (NYSE: JCP) ripped higher on Tuesday morning, tacking on nearly 6 percent. In the past 5-days, JCP has gained nearly 11 percent. While impressive, considering the sickly valuation, many investors remain unimpressed, and JCP is still viewed overall by many Wall Street investors as a company in crisis.
J.C. Penney's turnround plan, a brash effort to rebrand the retailer orchestrated by CEO and former Apple VP, Ron Johnson, has fallen onto hard times, causing the company to retreat from previously announced plans to offer everyday low pricing.
Over the weekend, J. C. Penney announced another coupon promotion, leading some analysts to conclude that the company has reversed course. If so, despite the recent bounce, the longer term implications could be significant, and dire.
With sales dropping like a stone, clearly JCP's turnaround is floundering, and retreat on pricing is no doubt a tempting road, but frankly it is hard to see a sustainable rally if Johnson is really giving up on his plans, despite what looks a lot like a short squeeze rally this week.
Johnson and Co. appear to be reaching a critical stage in the battle for survival. Like a general ordering troop movements on a battlefield, Johnson has a tough decision to make. Retreat may save a few lives in the near term, but it may ultimately cost J.C. Penney the war.
While some may argue a lack of flexibility can be just as costly, if J.C. Penney is going to go down in flames anyway, it should go down in a hail of gunfire. Not with the whimper of coupons and indecision, but with the bang of a company willing to fight the fight, led by a CEO with the confidence to stand up to his critics.
J.C. Penney's turnround plan, a brash effort to rebrand the retailer orchestrated by CEO and former Apple VP, Ron Johnson, has fallen onto hard times, causing the company to retreat from previously announced plans to offer everyday low pricing.
Over the weekend, J. C. Penney announced another coupon promotion, leading some analysts to conclude that the company has reversed course. If so, despite the recent bounce, the longer term implications could be significant, and dire.
With sales dropping like a stone, clearly JCP's turnaround is floundering, and retreat on pricing is no doubt a tempting road, but frankly it is hard to see a sustainable rally if Johnson is really giving up on his plans, despite what looks a lot like a short squeeze rally this week.
Johnson and Co. appear to be reaching a critical stage in the battle for survival. Like a general ordering troop movements on a battlefield, Johnson has a tough decision to make. Retreat may save a few lives in the near term, but it may ultimately cost J.C. Penney the war.
While some may argue a lack of flexibility can be just as costly, if J.C. Penney is going to go down in flames anyway, it should go down in a hail of gunfire. Not with the whimper of coupons and indecision, but with the bang of a company willing to fight the fight, led by a CEO with the confidence to stand up to his critics.
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