It’s a rarity for me to cheer for a particular company or its stock. This business requires level-headed, fact-based thinking, and I’m not doing anyone any favors by analyzing facts through a biased lens. I have to confess though, I’m rooting for J C Penney Company Inc (NYSE:JCP), and JCP stock as well.
It’s one of those underdog stories that isn’t necessarily going all that well, but you can clearly see the team making the comeback effort is working diligently to turn the ship around. Indeed, it’s the sincerity of this particular turnaround effort that’s keeping me interested.
You should remain interested too, as the struggling retailer seems to have almost figured out what’s going wrong, and almost found a winning formula.
JCP Stock Can Benefit from Jacques Penne
You know the story well enough. Once an icon within the retailing world, the advent of the internet and the rise of Amazon.com, Inc. (NASDAQ:AMZN) in particular has taken a toll on brick-and-mortar stores. Revenue has been dwindling since 2007, though the top line has at least stabilized since 2014.
Still, this is a company that’s far from growing with the economy. This is a company, though, that at least is trying some new things to rekindle its retailing business.
Case in point? Earlier this month the company opened a pop-up shop in Manhattan, featuring upscale gift ideas hand-picked by Nicole Richie. The idea was to draw attention to the company’s Jacques Penne website, which will be up and running through early January.
A game-changer? No, but a curious endeavor nonetheless.
The establishment of Jacques Penne shop and website follows the newly-forged partnership with big-and-tall clothier Bombfell. Again, it’s not a game-changer, but it does mirror a move made by indirect rival Wal-Mart Stores Inc (NYSE:WMT) in June, when it bought upscale men’s clothing retailer Bonobos, and then teamed up with Lord & Taylor last month.
Also counted among J C Penney Company’s recent creative efforts are a foray into toys, doubling down on cosmetics and the re-introduction of appliances in some locales.
None of these efforts have been smashing successes. None of them have been outright failures either. I suspect each of them added at least a modest degree of new business though, even if they didn’t offset business lost on other fronts.
It’s Not About Smashing Successes for JCP Stock
It’s not the success (or lack thereof) of these initiatives that’s so encouraging, however. It’s that CEO Marvin Ellison is trying new things, and learning something new from each experiment.
Given time, enough of this proverbial spaghetti will stick to the wall, and even the spaghetti that doesn’t stick to the wall adds to the knowledge base J C Penney Company has at its disposal.
And for the record, I’m not easily impressed. Sears Holdings Corp (NASDAQ:SHLD) CEO Eddie Lampert has been preaching about the company’s “transformation” for years now, and the only transformation seen thus far as an increasingly smaller top line, and steady losses.
Sears’ leadership may have worked hard and tried new things, but they didn’t work smart and do things that actually help. I’ve been more than happy to point that out several times.
J C Penney Company’s is a different story though. With Penneys, there’s a decent reason to have hope. Ellison is not fooling himself or anyone else. Some of these experiments will work better than others, and the retailer is finally making good progress on the omnichannel front.
Looking Ahead for JCP Stock
While the company may be in better shape than the market’s giving it credit for, until investors are willing to give it that credit, my optimism means nothing.
Investors price stocks based on the future they perceive about the company right or wrong and JCP stock continues to stumble its way to new multi-year lows.
My gut still tells me this story is somehow different than other retail stories, however, and not like the tales of woe being told by rivals Macy’s Inc (NYSE:M) and Kohl’s Corporation (NYSE:KSS).
Piece by piece, Ellison is rebuilding the company to compete in 2017 rather than rebuilding its 1997 version. All these experiments J C Penney is performing are experiments most other retailers aren’t even willing to try.
A “buy”? Not necessarily, though investors have taken on crazier gambles. At the very least though, JCP stock is a name that merits a spot on your long-term watchlist.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter, at @jbrumley.
