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JCP - opportunity or disaster?

1,871 Views | 15 Replies | Last: 5 yr ago by MrJonMan
chris1515
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Looks like JCPenney stock is continuing it's march towards zero...but...will it get to zero, or bounce back?

Anyone on here have the time and interest to do some research and see if this will remain a going concern, or what the liquidation value might be?


https://finance.yahoo.com/chart/JCP#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
DannyDuberstein
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Stick a fork in them. Retail has been on a pretty good run lately thanks to the strong economy, all while JCP continues to slide and burn cash.
chris1515
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I agree that's the obvious sentiment. I wonder though if a closer look might reveal some overlooked value that might be realized in the next 12-24 months.

I don't know what that might be...but if they have no pending liquidity issue, maybe they have time to figure something out.
Marvin_Zindler
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JCP has been circling the drain for years. Somehow they keep holding on. I don't get it.
leoj
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Seems like Macy's has the better chance of survival?
JSKolache
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Disaster. You could make a few bucks (+1.7% today) if you watched closely, but not worth the risk/effort for me. Certainly not a buy and hold.
12thAngryMan
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Haven't done any diligence on it personally, but I remember reading articles a few years ago that said the fair value of their real estate holdings might be worth a decent amount...like as much or more than their market cap. I guess in bankruptcy the shareholders wouldn't see much of that after the debtholders get their cut.
Topher17
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Did a full semester long study and valuation of JCP last spring and I wouldn't even consider buying it. It is a mess and there's no conceivable way they can service all of their debt over the next few years.
DannyDuberstein
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They don't have a CEO or any real direction, so any bet on a strategy that might boost the price is complete speculation. As far as their RE holdings, it seems that they've either sold or borrowed against so much that I wouldn't bet on value there. They've used it up for cash.
Picard
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v
DannyDuberstein
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What's still amazing to me is that two companies with such a significant history in the catalog business could be so unprepared for the eCommerce world. The catalog was basically eComm before the internet, so both should have significant experience with some of the difficulty executing that type of business (i.e. easy to take an order, harder to get the right product to where it needs to be). You would have thought they would have had some sort of head start. But badly missed the boat. Probably because they both mostly carry a bunch of crap products.
ATM9000
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DannyDuberstein said:

What's still amazing to me is that two companies with such a significant history in the catalog business could be so unprepared for the eCommerce world. The catalog was basically eComm before the internet, so both should have significant experience with some of the difficulty executing that type of business (i.e. easy to take an order, harder to get the right product to where it needs to be). You would have thought they would have had some sort of head start. But badly missed the boat. Probably because they both mostly carry a bunch of crap products.

eCommerce is very different than catalogue because it allows innovative and more nimble players into the retail space. There are a ton of online peddlers who could never exist 20-30 years ago because they didn't have the scale to reach the masses that JCP or Macy's has. That's the major change: barriers to entry into the market place. The second major change is ecommerce has really been a game changer in terms of working capital for the retail industry and have made traditionals not be so lazy about managing theirs.

What Ron Johnson did to JCP is really one of the poorest executed transformation visions I can remember in any business in the last 20 years or so. Mass and effectively immediately roll out of his vision, no backstops to fail fast with it all with little to no testing of the pricing and merchandising strategy, just a big ****ty roll out that pissed all of the customers off and left the brand with a massive identity crisis. Didn't tailor a transformation to his customer base... just rolled something else out hoping to pull in new customers... doing so in a really bad economy at that. Branding is doubly important in he internet age and Ron Johnson just took a big old dump all over the brand that he had. Pretty arrogant management overall and complete disrespect of JCP's brand and shareholders,

I wouldn't touch JCP and it is amazing that they still exist.
DannyDuberstein
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Yes, I understand ecomm allows small players into the space and these big olayers end up defending themselves against a slew of co they didnt have to worry about before. Just making the point that one area where you do have a potential competitve advantage is with an inventory and distribution network that should be more optimized. Can be especially valuable when selling discounted crap so that you can protect your margin on shipping said crap. My surprise is at how massively they failed being able to operate in that entire space when many other big retailers adapted and are competing.

You're right about Johnson. Amazing failure.
ATM9000
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DannyDuberstein said:

Yes, I understand ecomm allows small players into the space and these big olayers end up defending themselves against a slew of co they didnt have to worry about before. Just making the point that one area where you do have a potential competitve advantage is with an inventory and distribution network that should be more optimized. Can be especially valuable when selling discounted crap so that you can protect your margin on shipping said crap. My surprise is at how massively they failed being able to operate in that entire space when many other big retailers adapted and are competing.

You're right about Johnson. Amazing failure.


But I guess my point is it isn't that operations sucked... their branding just became so awkward and bad that they had few customers to sale online to.

Having massive inventories sapping up working capital is the opposite of a competitive advantage in this era of retail and logistics modernization has really made any internal distribution networks not a competitive advantage anymore.

So many retailers are offering so many different things now, you better have your corner and brand, stand on it proudly and live and die by it or you are gonna get destroyed in this retail environment.

Johnson made the classic mistake of choosing a model and trying to tailor his customer base to it rather than letting his brand and customer base tailor his model. JCP's failure was classic brand failure, not operational shortfalls.
DannyDuberstein
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I don't disagree. My point is they had a brand, they had a long history of people getting **** in the mail from them, they had some built-in advantages to win ...and blew it anyway.
fairviewcrew
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All I know is that I went to a JCP for the first time in maybe 15 years last month... it is a total disaster in there. Like folding tables with piles of discounted clothes in no particular order, no employees anywhere to be found . It makes Marshall's looks like Saks.

From a real world perspective, my wife does most shopping online and if it's a department store it's Nordstroms because it's so easy to return there. Dillard's is still a pretty respectable store inside as well.
MrJonMan
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When JCP started selling appliances it seemed like a bad idea
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