JCP Stock Lesson #3 - Retailing Isn’t a Business That’s “Run by the Numbers”
Truth be told, hedge fund manager and acting Sears Holding (SHLD) CEO Eddie Lampert has taught this lesson at least as well as JCPenney has, though both companies make the point pretty well: Retailing may look easy from the outside, but from the inside, it’s exceedingly difficult.
It requires maintaining the right balance of personnel management, effective advertising, expense control, customer service, proper inventory systems, and efficient operations (just to name a few). And, it requires balancing those things in an environment where doing things right in one of those areas may adversely impact success on one of the other fronts.
It’s a finite balance that’s not required in any other industry, which may be why activist investor and former-largest JCP stock holder Bill Ackman seemed genuinely surprised when his and Johnson’s initiatives failed to get traction. He was running the business by the numbers, as if it were a factory.
In other words, the “if you build it, they will come” approach doesn’t work in retail. It sure didn’t work for JCPenney and JCP stock owners anyway. It’s ultimately about people-management rather than numbers-management.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities