So a few months ago, before our recent trip to Argentina, I went to JC Penney for some socks and underwear, and I was amazed at what I saw.
About a year ago I remember reading that Ron Johnson, the guy who spearheaded Apple's hugely successful retail stores many years ago, had left Apple to become CEO of JC Penney. His goal: rethink JCP's entire retail strategy. The stock jumped on the news, but then settled back down. Last January, JC Penney announced their new strategy: low prices every day, plus new brands and better selection. This boosted the stock from $35 to to $43, but then it settled back down again. Three weeks ago, JCP plunged from $34 to $26 on news that the new strategy has not produced the desired results. The company reported a first-quarter loss and suspended dividends.
Tim Travis does a good job of summarizing the rationale for buying JCP at these levels. The Street, however, is very disappointed, with many arguing that a strategy of everyday low prices just won't work—too many people are addicted to sales. In any event, I hasten to add that just about all I know about the stock can be found in this post.
What really gets me excited is that I have visited a JC Penney store about five times in the past month or so, and every time I've bought things I wasn't even looking for. This is not the store I remember, not at all. The prices (all rounded to nearest dollar, which makes me feel like they aren't trying to fool me) are extremely reasonable and in many cases unbelievably cheap. The quality is excellent, and they have the latest fashions, with lots of name-brand merchandise.
If you haven't already, I strongly recommend you visit a JC Penney store and check things out for yourself. I can't believe that great stuff for low everyday prices won't eventually be a winning formula. And for those that like sales, they have a special every month on a certain collection of things. Today I bought Father's Day stuff (all on sale: two shirts and a pair of shorts) for myself, and was stunned when I saw the total: $49, including tax. My wife thought they were fantastic. I'll be wearing them to a BBQ tonight.
I am going to be looking closely at taking a position in JCP.