Archive

Posts Tagged ‘J. C. Penney’

JCPenney (JCP) is a Bad AAPL

April 9, 2012 4 comments

How much absolute crap has the public been fed about how JCPenney (JCP) was going to miraculously transform themselves into the AAPL of retailing? JCP was going to become our favorite place to shop, or some, B.S. But, it is looking more and more like all of the buy-side stock analysts that urged suckers, er investors, to purchase JCP stock and ride it all the way up to $40 or $42 per share were full of baloney. Seems to me that you can’t have junk, or crap, if you don’t have JCP.

To see how ludicrous predicting a plus $40 JCP stock price, take a look at the JCP 5-year stock price chart.

JCPenney JCP 5-year stock price chart

Apparently, stock analysts calling for $40 plus JCP stock price never saw this chart

After all, with the huge economic boom brought about by quantitative easing Helicopter Ben Bernanke and the boys at the Federal Reserve, why wouldn’t JCP stock reach into the heavens?

Instead, Icarus-like, JCP stock price got a little too close to the sun and is now falling back to earth.

JCPenney JCP 3-month stock price chart

JCP: But the stock analyst said it would go to over $40 per share...

I hate being lied to and I find it annoying when people can’t see the obvious. What in the world would make anyone believe that JCP and AAPL should be spoken in the same breath, much less that JCP will somehow transform its snoozapalooza anchor mall locations into Apple Stores?

Who came up with the crank concept of creating “a store within a store”? I prefer to call the strategy concentric circles of hell, but that’s me.

If I were in charge of JCPenney I would have closed down the unprofitable and marginal stores and remodeled every one of the crap mall locations like I have in my town. Instead of the traditional “rat searches for a piece of cheese strategy” whereby JCPenney makes its poor customers wander around aimlessly hoping to encounter what they are looking for, I would make it easy to shop there. The store would be open with signs indicating each department – not “store within a store”.

Employees would have a distinctive uniform in order to separate them from customers. Employees would not be allowed to hide from customers while they attempted to look busy folding clothes. In fact, employees would be required – in a not-too-aggressive manner – to make contact within second with each customer who came into their department. There would be something akin to a shopping assistant who would be certain to ask you if you found what you were looking for today, and if you answered “no” would offer to order the item and have it either shipped to the store or to your home. Cash registers would be clearly labeled and colored distinctively so they stood out from anywhere in the store.

When customer checked out they would again be asked if they found the items they were looking for. If not, there would be a kiosk-type display where an employee would find the item and offer to order it or – if the item was in stock – would go pick it up and bring it back to you.

Old line retailers like JCPenney, big box retailers like Lowe’s lose incalculable sums of money because they treat customer more like a nuisance than like the lifeblood of their business.

JCPenney’s silly junk marketing of everyday low prices, and crap ideas of becoming Apple are beyond wishful thinking. There is almost no hope that JCPenney will ever, ever, ever come close to achieving those ridiculous ideas. JCPenney could, however, offer a pleasant shopping experience with excellent customer service and grow its incremental sales. That is a tried and true method that, combined with taking advantage of the Internet, could prevent JCPenney from eventually meeting with the fate that awaits Sears and K-Mart. However, I doubt the CEO and many Senior Vice-Presidents will take the time to look at what really might work, and will instead continue to pump AAPL pie-in-the-sky ideas while watching JCP stock slide.

Disclaimer: The above is for informational purposes only. This should not be considered investment advice. Any investment decisions are your own and should be made after conducting your own independent research and / or in consultation with a professional investment advisor. 

Advertisements

JCPenney JCP: Fantasy Stock Target Price, Fantasy Turnaround Plans

April 2, 2012 1 comment

JCP Chart

JCP data by YCharts

So much chart real estate, so little time over $40.00. Yet, so many stock analysts think JCPenney JCP is a $40.00 plus stock. If you clicked on the link above you’ll find the consensus JCP stock price estimate is $43.00. Yes, $43.00. Take a look at the chart above. how much plus $40.00 JCP stock price days do you see? Not many. Yes, that last price is $35.76. Kind of makes the low-ball $29.00 JCP analyst look a little brainier (or more honest) than the rest.

This kind of maddening stock price analysis is why I want to slap a JCP stock analyst and then slap the stock analyst again.

I’m no Ivy League educated stock guru, but does it take one to read a the JCP stock chart?

I’m not the only one who sees through JCPenney’s lame effort to become the Apple of retailing, everyone’s favorite store, or whatever brain dead slogan they have come up with the help of their army of senior-VP’s recruited from Target.

Steven P Dennis does yeoman’s work analyzing the river of B.S. emanating from the JCPenney corporate communications department here, here, and here.

Yes, nothing makes an old, stodgy and boring retailer like JCPenney more nimble like a whole other layer of VP’s to muck everything up.

But, back to the chart’s, here is a look at the JCP 6-month stock price chart.

JCPenney JCP 6-month stock price chart

JCP: Whee! We're a $40.00 stock and then we're not.

While the price of JCP has slid recently, looking at the 21-day detrended price oscillator at the bottom of the chart, it is currently very oversold, so we should expect it to bounce back somewhat.

It is important to note, however, that JCP has strong overhead price resistance around the $40.00 mark – just where so many stock analyst are convinced it will break through. Why? I’m not sure.

In addition, the JCP stock price fell through the bottom of the purple colored Andrew’s Pitchfork and crossed the white sell trigger line. The sell trigger line and then, the bottom of the Andrew’s Pitchfork, become price resistance.

So, JCP has a long, long way before it even gets close to $40.00.

Now, let’s look at the JCP 5-year chart.

JCPenney JCP 5-year stock price chart

JCP: I see, I see JCP struggle to break forty.

On the 5-year JCP stock price chart, if you look at the white line on the 21-day detrended moving price average chart, you’ll notice JCP has rarely peaked up over the $40.00 price line. Aren’t those JCP stock analysts sunny optimists?!? “This year is going to be the year!” they shout as they lick their giant lollipops and gallop off on their broomstick horses.

In contrast to the 6-month chart, the 5-year chart indicates that long-term the JCP stock price is still overbought. Ouch! So, while we may get a head-fake uptick in price, expect the medium-to-long-term price trend to be down rather than up.

J. C. Penney

J. C. Penney (Photo credit: Wikipedia)

Plus, with fantasy concepts such as a “store within a store” which I liken to concentric rings of Hell, JCPenney’s “plan” to revitalize their business with “everyday low prices” is as unbelievable as the stock analysts’ $43.00 JCPenney stock price target.

JCPenney (JCP): Analyze This

March 30, 2012 2 comments
Would you buy a stock from this guy?

In light of the incredible falling price of JCPenney (JCP) stock, you might want to slap one of the stock “analysts” who set a target price for JCP of over $40.00. Then, slap the analyst again, for giving the stock a buy or hold rating. The fact is  many of these analysts are merely working the makeup counter for PigsRUs.

Buy side analysts often have some sort of vested interest in the stock. A buy side analyst working for a mutual fund or investment management company typically owns the stock he or she is covering.

(Read more: http://www.investopedia.com/articles/stocks/10/stock-analysts.asp#ixzz1qaIAwY6p)

To me, it seems a bit like a potential sucker (er, customer) walking into a used car dealer and asking the liar (er, car salesman) anything about a car. Of course every car was driven by a little old lady, who only went to the grocery store once a week to buy Alpo for her and her dog. She polished the car every day with a cloth diaper and had all the recommended maintenance done on schedule. Or was the car owned by a hot-rodding teenager who liked to burn rubber and had no idea that you had to change the oil?

Anyhow, it doesn’t take the razor-sharp skills of a buy side analyst to look at JCP. Just go to your local JCPenney. Is there anything exciting about the experience without a giant discount off the price of the merchandise? Do you wake up Saturday morning and the first thought that goes through your mind is, “Yippee, I’m going to JCPenney”?.

Does anyone really think you can re-imagine JCPenney any more than you can visualize world peace?

You might think iPhones have little to do with selling housewares. But to hear Johnson tell it, it’s all about the mind-set and how a company approaches its customers. In a conference call, there were plenty of distinctively Apple-esque phrases used — “re-imagine,” “think differently” and “work creatively” to name a few.

The idea that Apple and JCPenney have anything to do with each other is absurd. Short of a going out of business sale, what is JCP going to do that is going to get a crowd of people wrapped around the block before the doors open. “Man, I can’t wait. JCP just got the latest shipment of Dockers!”

Steven P Dennis offers up some of the best analysis and criticism of JCPenney’s new strategy.

In Part 1 Dennis takes apart the pricing strategy:

First of all, unlike Nordstrom, every promotional retailer like Penney’s (and Sears and Macy’s and Bed, Bath & Beyond, etc.) has taught their customers–over many, many years–that their “regular” price is a sucker price. Reversing this perception will not happen quickly, no matter how creative your new ad campaign is and no matter how much money you throw at it in the first few months.

In Part 2 Dennis takes apart the re-invention of JCPenney:

While I have no doubt that Penney’s can benefit from many of the leadership lessons and certain tactical aspects of Apple’s retail strategy, Penney’s ain’t Apple. It’s a lot easier to build retail stores around products that are in high demand, have limited distribution and “fixed” high margins. Apple is a single brand specialty store with a clear tribe of loyalists, not a multi-brand, multi-category store serving an incredibly diverse set of customers.  Apple is vertically integrated and the stores benefit directly from total brand advertising–and a ton of buzz. All of Apple’s stores are in “A” real estate locations and have a tight prototype and are not unit intensive. The list goes on and on.

In Part 3 Dennis looks at the slick marketing versus the sad reality of JCPenney stores:

In the short-term, the work of marketing is to get the target customers’ butts in the store (or drive them to the website). I suspect the new campaign IS elevating interest in JCP and starting to drive incremental traffic. Yet while Penney’s has improved their presentation markedly, the stark reality is that both the product assortments and overall experience are still pretty much the same–i.e. unremarkable in most instances. And unlike Apple and Target, Penney’s store fleet is a grab bag of some very good locations with a whole bunch of mediocre and lousy ones.

We all know that when the invitation is better than the party, we aren’t very likely to get fooled the next time around.

It’s not likely that once customers get pushed to the local JCPenney by the latest Ellen Degeneres ad, that they will be dancing in the aisles.

http://cdnapi.kaltura.com/index.php/kwidget/wid/1_43rfgjve/uiconf_id/6501231

The latest JCP charts aren’t anything to get excited about either.

JCP Chart 3-29-12

Hey JCP, $40 is the other way!

JCP stock price still is below the sell trigger line and also within a downward-trending price channel. I don’t care what Herb Tarlek the buy side analyst says, the price of JCP will go down until it manages to break out of the current chart pattern.

JCP stock price still falling

JCP: No dancing in the aisles here

So, despite what Herb Tarlek buy side analyst might say, and despite the star power of Ellen Degeneres, the JCP stock price is going down. How long the downward trend continues remains to be seen, but the charts are clear. You don’t need to be a stock analyst or an expert on retailing to see that it won’t be easy for JCP to hit the $40.00 target analysts are expecting. Just go down to your local JCPenney and compare the vibe to an Apple Store or even the local Target. Trust your gut. Use your common sense. That’s something Herb the buy side analyst will likely never do.

Disclaimer: The above is for informational purposes only. This should not be considered investment advice. Any investment decisions are your own and should be made after conducting your own independent research and / or in consultation with a professional investment advisor. 

JCP Stock Chart: Keep Slapping the JCP Stock Analyst

March 27, 2012 6 comments

In an earlier post about JCPenney I asked if it was time to slap your stock analyst. With all the analysts calling for JCP to rise to $40.00 or above, it isn’t too surprising that several people have found their way to my articles on JCP using a variation of the search term “is JCP stock price falling?” The short answer is yes.

Perhaps the more relevant question is, will the JCP stock price continue to fall. A few charts might help us decide.

JCP Stock Price Chart 3-26-12

JCP stock price continues to trend down

Looking at the first chart above, it is actually quite stunning that anyone is asking if JCP is falling in price as it has been in a declining channel for over a month.

On the chart, JCP has fallen through bottom support in the Andrew’s Pitchfork, as well as through the sell trigger line. It is now in a declining price channel. The only question is, How long will JCP remain in that declining price channel?” Perhaps the next chart will at least give us an idea.

JCP 3-month chart

JCP 3-month chart

The above JCP chart, looks quite similar to the previous chart. This chart is only a 3-month chart. Note that overhead price resistance is approximately $42.00.

Probably the most noteworthy feature of the above chart is the detrended 21-day exponential moving average. When JCP took that giant jump in price, the detrended price oscillator jumped out of the channel it had been in and stayed outside it for around a month.

The detrended price oscillator is currently outside the bottom of the channel now and has been there for about two weeks. So, it is possible it could remain outside the channel for a bit longer.

For the JCP stock price to begin rising it is going to have to break through quite a few resistance levels on the chart including:

  • The declining price channel
  • The sell trigger line which now provides overhead resistance
  • The bottom of the Andrew’s Pitchfork

Aside from the whole JCPenney as the Apple of retailing meme, there are some serious  issues to be overcome on this chart before we can seriously talk about an increase in the JCP stock price.

In the meantime, if you see one of the JCP stock analysts calling for a $40.00 price target, be sure to slap them for me.

Disclaimer: The above is for informational purposes only. This should not be considered investment advice. Any investment decisions are your own and should be made after conducting your own independent research and / or in consultation with a professional investment advisor.

Chart: JCP – Time to Slap a Stock Analyst?

March 24, 2012 8 comments

Stock analysts love to sell the idea of JCP stock at $40.00. Just check out here and here.

However, looking at the 5-year chart, you’ll notice that there is very strong resistance at the $40.00 level.

J.C. Penney Company Stock Chart

J.C. Penney Company Stock Chart by YCharts

So, considering the continued weak state of the economy, and the strong resistance right around the $40.00 level, it appears incredible to me that stock analysts would have a $40.00 or higher target.

Reviewing the chart, JCP, in fact, crossed into overbought territory around $42.00 and then proceeded to drop through all the support levels of the Andrew’s Pitchfork until, on 3-23-12, the price took out the sell trigger.

JCP Chart 3-23-12

JCP has fallen through the sell trigger line

Could JCP stock rise in price and cross the sell trigger line to the upside? Yes, it has been hovering near that line for several days.

A similar chart, over a slightly longer time frame looks almost the same as the chart above.

JCP 1-year chart 3-23-12

JCP 1-year chart

I believe these charts reflect not just technical information and patterns about the price of JCPenney stock, but they also reflect skepticism that JCPenney can execute its campaign to become the “favorite store for everyone”. Such hyperbole is more worthy of a teenager wishing to be the most popular kid in school than a major retailer with the long and storied history of JCPenney.

Steven P. Dennis offers some interesting criticism in a two-part article:

First, anyone who knows retail knows how foolish a high/low pricing strategy seems. The amount of money spent advertising events in weekly circulars and various broadcast media is enormous (and increasingly ineffective). The payroll and collateral costs of constantly changing in-store signing is a major line item. And “forcing” consumers to wait for a sale or have a coupon or get your store credit card to obtain the best price is seemingly a big customer dissatisfier (sic).

So going to “fair and square” everyday pricing would seem to be a win for the consumer and a major improvement to any retailer’s earnings. Why not emulate Nordstrom and get both great Net Promoter scores and have an advertising to sales ratio that is the envy of the competition? It’s a slam dunk, right?

Well, not so fast Skippy.

First of all, unlike Nordstrom, every promotional retailer like Penney’s (and Sears and Macy’s and Bed, Bath & Beyond, etc.) has taught their customers–over many, many years–that their “regular” price is a sucker price. Reversing this perception will not happen quickly, no matter how creative your new ad campaign is and no matter how much money you throw at it in the first few months.

Second, every retailer has a customer segment that is intensely deal driven. This group refuses to buy unless they are convinced they have gotten the best possible price. And they believe they can ferret that out. They love the thrill of the hunt. Buying something without some special incentive is an anathema to them.

History shows–whether you are Sears, Macy’s or Saks–that when you pull back on promotions this segment’s business drops like a rock. If they are a tiny fraction (or an unprofitable piece) of your sales, it’s not a big issue. If, as I suspect is the case at JCP, they are a meaningful profit contributor, the short-term hit is significant and they will be hard to win back.

Third, like it or not, promotional marketing creates urgency to buy. Major events with limited time offers drive traffic. In-store messages that shout a great deal increase conversion. Over time hopefully Penney’s can teach their consumers that every day is a good day to check out their store and that there is no reason to shop around for a better deal. In the immediate term sales will suffer.

Lastly, and perhaps most importantly, the math on everyday pricing is tough. While it is true that most consumers buy at the lowest promotional price, it is also true that there are plenty of customers who pay full price (or receive a lesser discount). To achieve the same gross margin percentage would mean setting an everyday “fair and square” price that is above the lowest historical promotional price. But by doing that, you will be uncompetitive with your direct competitors.

In the second article Dennis outlines how JCPenney takes a swing of the bat and misses with its new strategy:

But at the same time, there are several critical aspects of their vision–and way of thinking–that I worry about.

First, there are the relentless comparisons to Apple and the success of their retail stores. Every time I hear Ron Johnson refer to his success there I’m reminded of the old Steve Martin joke about how to be a successful millionaire: “Step 1: Get a million dollars. Okay, Step 2 …”

While I have no doubt that Penney’s can benefit from many of the leadership lessons and certain tactical aspects of Apple’s retail strategy, Penney’s ain’t Apple. It’s a lot easier to build retail stores around products that are in high demand, have limited distribution and “fixed” high margins. Apple is a single brand specialty store with a clear tribe of loyalists, not a multi-brand, multi-category store serving an incredibly diverse set of customers. Apple is vertically integrated and the stores benefit directly from total brand advertising–and a ton of buzz. All of Apple’s stores are in “A” real estate locations and have a tight prototype and are not unit intensive. The list goes on and on.

Second, in their investor presentation they said “we want to be the favorite store for everyone.” I hope this is hyperbole because it’s so patently ridiculous. While the size and scope of Penney’s footprint necessitates a reasonably broad set of consumer segments, THE number one challenge of this management team is to define the key customer segments they wish to own, rigorously edit (and develop) their assortments against these target segments and then deliver a remarkable and relevant cross-channel experience for them. Penney’s will not win by going broad and shallow. Every winning retailer on the planet wins through a well-honed differentiation strategy and clear positioning.

Related to this is the new team’s apparent unwillingness to believe that “treating different customers differently” is an increasingly powerful point of competitive advantage and fuel for profitable growth. Various reports suggest that little to no consumer research or segmentation analysis was done to vet their new strategy and one of their first moves was to blow up major pieces of their customer analytics/CRM group and bring in a guy with little apparent direct marketing/customer analytics experience to head up the remnants. In their 2 day investor presentation there was little mention of any actual consumer behavioral data and what was mentioned was, to me, either obvious or irrelevant.

Clearly Penney’s must get the big, foundational pieces right or the notion of competing on analytics by moving to deeper personalization will be irrelevant. But to move towards an everything to everybody sort of strategy strikes me as somewhere between folly and lunacy. I suspect you will see them reverse their course on this by year’s end.

As Penney’s reports what I am fairly certain will be a disappointing set of initial results, I hope the new team will embrace humility, stop flogging the Apple comparisons and get focused on deep customer insight and the need to build a set of rich, relevant, channel-agnostic and increasingly personalized set of value propositions for a well-defined set of customer segments.

If not, it will be strike 2.

Ultimately, I believe that JCP will strike out with its new strategy. The idea that JCPenney can transform itself into a cross between Apple and Target is absurd. Apple and Target already exist and fill their niches quite nicely. The idea of becoming the “favorite store for everyone” is equally absurd.

In my opinion JCPenney needs to focus on delivering the right products at the right price. These products need to be merchandised attractively and easy to find. Sales staff should be made to stand out rather than blend into the boring JCPenney woodwork as they currently do. The idiotic concept of stores within a store should be abandoned. Such a concept strikes me as concentric circles of shopping hell. Instead, JCPenney should concentrate on creating one unified, pleasant, and affordable shopping experience. Perhaps, if JCPenney focused on this rather than their current incomprehensible and dead-end strategy, they might give the public a reason to shop there and stock analysts a real reason to raise their price forecasts.

Disclaimer: The above is for informational purposes only. This should not be considered investment advice. Any investment decisions are your own and should be made after conducting your own independent research and / or in consultation with a professional investment advisor.

JCPenney (JCP) Look out for Falling Stock Price

March 18, 2012 6 comments
Everyday Low Prices: Where have I heard that one before?

JCPenney, masters of the original, are promoting low, everyday prices.

Despite trying to be the most interesting store in the world, it appears that JCPenney’s (JCP) stock price is about to fall like the prices inside of a Wal-Mart.

JCPenney: Look out for Falling Stock Prices

JCPenney's stock price has fallen through the bottom of its Andrew's Pitchfork and are sitting right on top of the sell trigger.

Looking at the JCP chart above, its price has fallen through the bottom of the Andrew’s Pitchfork and is now sitting right on the sell trigger line. If the price falls much below Friday’s close of $36.24, then the JCP stock price is going to fall faster than the price of ice melt in Wal-Mart after a mild Missouri winter.

Disclaimer: I’m not a stock broker, so unlike a certain broker of days gone by, you don’t have to listen to me. Do your own research. Do your own thinking. Don’t be a lemming. The above is provided as information and entertainment only. Capiche?!?

Update 3-19-12

J.C. Penney Company Stock Chart

J.C. Penney Company Stock Chart by YCharts

JCP has managed to bounce off the sell trigger line for now. That being said, it still isn’t a pretty picture as it had already fallen through the bottom of the Andrew’s Pitchfork above and still sits precariously close to the sell trigger line. My gut tells me that JCP will soon break that line and continue downward. But hey, maybe it’s hunger pangs since I haven’t had lunch yet.

Update #2: 3-19-12

Looks like JCP is slipping a bit.

J.C. Penney Company Stock Chart

J.C. Penney Company Stock Chart by YCharts

It’s not easy trying to be like Apple I suppose, what with all those shiny new iPads that CNBC has been slobbering over all day (what a bunch of shills). Of course that won’t keep me from buying my wife one.

But, just because JCP has a former Apple executive in charge doesn’t mean they can convert the JCPenney at our local mall into an Apple Store. I don’t think they can. I rarely go to the old line retailers like JCPenney or Sears. There is just something very old-fashioned and unappealing about them to me. I’ll let the over 50 crowd have them. I much prefer a hit and run trip to Wal-Mart, Target, or better yet, shopping online at Amazon than going down to boring old JCPenney. It looks like I am not alone in that sentiment.