J.C. Penney Suppliers Ride Retailer’s Revamp

by Alyssa Oursler | October 1, 2012 9:40 am

When looking at any stocks, it’s crucial to remember that no company exists in a bubble. In fact, all companies form complex chains — which makes for some pretty interesting relationships.

Some companies, for example, cash in on the success of others. The latest example? J.C. Penney (NYSE:JCP[1]).

Well … not J.C. Penney, but its suppliers. The company’s makeover has yet to fuel its turnaround, but the retailer’s many changes have come with their share of beneficiaries.

Leggett & Platt (NYSE:LEG[2]) most notably, provides fixtures and displays for the in-store boutiques that were recently unveiled[3] — and the partnership has helped revitalize its commercial business.

J.C. Penney also wants to use radio-frequency identification (RFID) tags for all items in the store. R.R. Donnelly & Sons (NYSE:RRD[4]) is one possible contractor the company might partner up with for the inventory overhaul.

On top of that, the company’s struggles have also given a nice boost to some competitors. Sears Holdings (NASDAQ:SHLD[5]) had double-digit sales increase in its apparel and footwear business during the first quarter that Ron Johnson’s new strategy was implemented, for example, according to The Wall Street Journal[6].

While its a completely different company, a similar scenario is taking place for Google (NASDAQ:GOOG[7]), who has ridden on the woes of a rival.The Internet giant’s shares were shaky heading into web-rival Facebook’s (NASDAQ:FB[8]) IPO, but has actually cashed in on the new kid on the block’s struggles[9].

While Facebook has lost nearly half its value since going public, Google has gained around quarter of its value,  as investors realized the threat was probably overdone. Plus, the company has several qualities (check out this article[10] to find out what they are) that would offset such a threat anyways.

And then, of course, there’s Apple (NASDAQ:AAPL[11]), which also comes with a similar, albeit much larger, web of relationships.

For the full rundown on which names have been killed by the tech giant’s success — and which have ridden its coattails upwards — check out “Apple, the Kingmaker  — or Company-Breaker.”[12]

And remember, as author Chuck Klosterman wrote: “In and of itself, nothing really matters. But nothing is ever in and of itself.”

As of this writing, Alyssa Oursler did not own a position in any of the aforementioned securities.

Endnotes:
  1. JCP: http://studio-5.financialcontent.com/investplace/quote?Symbol=JCP
  2. LEG: http://studio-5.financialcontent.com/investplace/quote?Symbol=LEG
  3. in-store boutiques that were recently unveiled: http://investorplace.com/2012/07/j-c-penney-reveals-first-3-new-in-store-shops/
  4. RRD: http://studio-5.financialcontent.com/investplace/quote?Symbol=RRD
  5. SHLD: http://studio-5.financialcontent.com/investplace/quote?Symbol=SHLD
  6. according to The Wall Street Journal: http://online.wsj.com/article/SB10000872396390443890304578010512988834582.html?mod=WSJ_business_LeftSecondHighlights
  7. GOOG: http://studio-5.financialcontent.com/investplace/quote?Symbol=GOOG
  8. FB: http://studio-5.financialcontent.com/investplace/quote?Symbol=FB
  9. new kid on the block’s struggles: http://investorplace.com/ipo-playbook/facebooks-worth-15/
  10. check out this article: http://www.usatoday.com/story/money/columnist/krantz/2012/09/27/google-facebook-ipo-stock/1597515/
  11. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  12. “Apple, the Kingmaker  — or Company-Breaker.”: http://investorplace.com/2012/09/apple-the-kingmaker-or-company-breaker/

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