JC Penney Dangerous Score with Jewelry and Maybe Gold $JCP $GLD

JC Penney (NYSE:JCP) is showing some encouraging signs of a pulse. While Q3 was expected to look ugly, Oct same store sales were up. JCP hasn’t seen up for a long time. The market is excited.

One of the categories doing well has been jewelry. The price of gold is off and it looks like JC Penney has not been caught with olde over priced stock. The question becomes does the value conscious shopper keep buying jewelry when the price of gold goes up? What will happen to the category? Price elasticity will skewer the shopper. Will this negatively impact same store sales in the future.

JC Penney does not compete with Tiffany’s (NYSE:TIF) or other high-end jewelers. But it will need to engage and retain their fleeting customer base. Disappointments will not work.

George Gutowski writes from a caveat emptor perspective.

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The Insanity of JC Penney. Reasons to invest or lose money. The Art of Buy Ugly Sell Pretty $JCP

Everyone by now is familiar with the tale of woe called JC Penney (NYSE:JCP). The iconic all American Merchant has a fundamental problem. It cannot find a way to take money out of the American Consumer’s pocket. Problems in the executive suite are well publicized. Strategic activist investor who helped create some executive suite problems proved he had more money than retail savvy.

Financial media, blogs and twitter streams are alive with shrill comments. Management didn’t help by saying they really did not need to issue the new stock and dilute long-suffering shareholders. Confirms that management does not understand the investing public which may be a worse problem than an inability to select saleable merchandise.

So do you stay or do you go. So take a few steps back and get some perspective. Assuming the current political stupidities in Washington are somehow resolved or kicked down the road ponder the following points.

  1. Why own legacy department store retail?
  2. Walk through a few stores and see what the merchandise is doing?
  3. Everyone is worried about Christmas. Christmas is over. The decisions have been made. The dice have been cast. They’re working on Spring.
  4. Watch the Black Friday super sales. JC Penney can track their numbers by the hour. Back to school sales are mostly over. Changing seasons is kicking in. Halloween is always a little bit of a booster shot but does not make the year. By the end of Nov management should know how the Christmas strategies are working out. If they discount like crazy they’re in trouble.
  5. This may be the classic deep value investment play. Buy ugly sell pretty. Right now it’s ugly; but is it ugly enough.
  6. Investors will be selling soon if you see some capitulation. Lock in the tax loss and revisit soon after. The price may go down to where it becomes an option without an expiration price. There is more downside pressure and I suspect the price will continue to drop. JCP will soon be too unstable for margin causing more downward pressure.

George Gutowski writes from a caveat emptor perspective. Read my next blog post for the secret tell that screams buy JC Penney

Secret Reason to buy JC Penney $JCP $TWIT

Last Aug 20 I blogged about relative Twitter feeds among retailers. 40 days have passed. JCPenney (NYSE:JCP) has grown a remarkable 25.7% from 167K to 210K. The growth rate is just over a thousand followers per day seven days per week. This is remarkable for a franchise which is supposedly in the toilet. If JC Penney can do this with all the bad news and dubious publicity there is a strong underlying reason to believe in the JC Penney franchise.

Shoppers find twits from JC Penney worth following.

Liquid deep value investors would buy in about now.

George Gutowski writes from a caveat emptor perspective. He does shop at JC Penney. Follow him on Twitter @financialskepti

Top Retail Twitter Power See who is strong and weak $TWIT, $T, $JCP, $WMT, $M, $XRT

Twitter is a growing social media force. Look at the rankings of Twitter followers as of Aug 20, 2013 numbers. Target (NYSE:TGT) is way ahead and over the horizon  with 745 K compared to other big names. Everyone likes something sparkly which must explain Tiffany & Co (NYSE:TIF) very strong number two ranking at 596 K.

Best Buy (NYSE:BBY), Wal-Mart (NYSE:WMT) and Nordstrom (NYSE:JWN) round out the top five with followers well over 300K.

Macy’s (NYSE:M) seems to have some work to do. At 224 K followers and eight position how happy can they be.

JCPenney (NYSE:JCP) retails problem child comes in two spots below Macy’s at only 167K. Which may explain some of their problems. Interesting after a CEO with Apples (Nasdaq:AAPL) DNA.

Sears with an anemic 54 K of twitter followers barely registers at 17th. That’s very much worse than JCPenney. Let me express that in a different way. They both stink.

Many retailers and brands have specialized twitter feeds which focus more closely on segmented buyers. But the top to bottom comparisons are very telling for most retailers.

If social media is the marketing powerhouse than big followings are a must. some of these guys need to hire their grandchildren and get their ratings up.

Here is the list:

Company                             Thousands of Followers

K

 

Target                                                 745

Tiffany & Co                                       596

Best Buy                                             385

Wal-Mart                                            358

Nordstrom                                        300

Barney’s                                             237

Bergdorf Goodman                         231

Macy’s                                                224

Saks 5th Ave                                      201

JCPenney                                           167

Neiman Marcus                               158

TJ Maxx                                             138

Bloomingdales                                 128

Kohl’s                                                 90

Homegoods                                      85

Marshalls                                           69

Sears                                                  54

Sams Club                                         42

Lord & Taylor                                    39

Costco                                                15

Dillards                                              14

Century 21 Stores                            8

Jos A Banks                                         7

 

George Gutowski writes from a caveat emptor perspective. Follow him on Twitter @financialskepti

JCPenney Bankruptcy Coming Soon $JCP $XRT

JCPenney Co Inc. (NYSE:JCP) sits on the cusp tottering into the black abyss of bankruptcy. American retailers say someone has to go. JCPenney is a good candidate. Hedge fund resigns from board after its determined he has not been effective in increasing shareholder wealth. Chosen crown prince from Apple has also left the field. A huge secured term loan has been arranged to maintain liquidity. Earnings release talks about liquidity and how current management is trying to fix olde managements problems.

The only attempt at optimism is “Back to School” sales look optimistic. Everyone knows retail is all about Christmas. The buying should be substantially done about now but management is not talking yet.

The company is living on borrowed time. The retail equivalent of “Battle of the Bulge” is on. Must do desperation with an everything must work ethos is at work.

Watch for signs of bankruptcy within management comments as they extol the virtues of what may become strong points such as retail locations or logistics. They will try to enhance value to bankruptcy buyers who will be prepared to pick up pieces.

Watch for store activity, check out lines, how many parking spaces are used and how ell the rest of the mall seems to be doing when JCPenney is an anchor tenant.

There simply is no tomorrow for this one.

George Gutowski writes from a caveat emptor perspective. Follow him on Twitter @financialskepti

JCPenney Bearhug From Cit Financial. I Smell John Thain $JCP $CIT $CIT

New York Post struck a blow for headlines and jeopardized thousands of jobs by reporting that CIT Group (NYSE:CIT) is squeezing JCPenney suppliers. Subtext: The all important Christmas season is coming. If you understand retail supply chain logistics the Christmas season is happening right now.

JCPenney (NYSE:JCP) has had well documented problems. William Ackman the renowned hedge fund activist wheeler-dealer has a famous long position which he may be re-cogitating. Senior officers are changing at JCPenney. JCPenney has also stopped issuing monthly sales data and therefore visibility for suppliers and the credit structure behind them is more complicated. Clear as mud.

So the word is Cit Group is squeezing credit for suppliers. New York Post has the scoop! No one is talking official like. Will this become a Reg FD issue. JCPenney has no control and no direct knowledge of the true circumstances. CIT Financial probably does not need to disclose anything because this is not material to them. William Ackman is probably drinking a double shot of single malt right.

What’s it all mean. Is JCPenney that different now from say a few weeks ago? Probably not.

I smell John Thain the former big shooter that sold Merrill Lynch to an unsuspecting Bank of America. (NYSE:BAC) Former CEO of NYSE and a President and Co-COO of Goldman Sacks (NYSE:GS)  is sort of hanging out at CIT Group until something better comes along.

Has he crossed swords with William Ackman or is there a bigger game going on. Methinks bigger game.

By the way releasing the story when the market is traditionally the most volatile is suspicious.

Machiavellian moves within an enigma.

George Gutowski writes from a caveat emptor perspective. Follow him on Twitter @financialskepti or follow his evil twin brother who writes Wall Street Murder Thrillers @georgegutowski

$JCP enney shoots the $AAPL guy. Target hires a $YHOO guy. Just what is the fashion in retail?

JCPenney (NYSE:JCP) whacked their Apple executive who was supposed to save them. Ackman cannot pick them. Now everyone is saying Apple executives are not very good outside of the Apple eco-structure.

Take a look at Target (NYSE:TGT) They just added to the board Henrique de Castro 47 who since Nov 2012 has been the chief operating officer of Yahoo (Nasdaq:YHOO) and has been at Google (Nasdaq:GOOG), Dell and McKinsey. Now clearly he is a board member and not the quarterback. But I find the hook up of a very newly minted COO at Yahoo coming on the board of Target.

Lets take a look at the rest of Targets board. Eleven independent directors. Average age of 55 and 7.5 years of tenure.

Gregg Steinhafel 58 is the President, CEO and Chairman. He has been with Target since 1979 when he joined as a merchandising trainee. Way more solid as a quarterback than the JCPenney guy who used to be an Apple guy.

Solomon D Trujillo 60. CEO of Telstra Australian Telecom. Why an Australian?

Mary Minnick 52 Partner with Lion Capital a consumer focused Private Investment Firm. 23 year career with Coca Cola culminating in senior executive positions. Consumer and retail. Got it.

Derica W Rice 47 EVP Global Services and CFO Eli Lilly & Company. Global perspective in a highly regulated drug industry.

Mary N Dillon 50 President and CEO of US Cellular Corp Wireless Telecom. Previously EVP and Chief Marketing Officer of McDonald’s. Burgers, cell phones they’re all consumable right.

Anne Mulcahy 59 Former Chairman and CEO of Xerox. Director of Washington Post and J&J. One of the longest-serving directors. Some logic to replace just to prevent staleness on the board.

Calvin Darden 62. Real Estate Development now. but was SVP of US operations for United Parcel Services. Gets the facilities and logistics for on-line fulfillment.

Roxanne Austin 51 is currently the President of Austin Investment advisors since 2004. Professional investor who can empathize with investor concerns.

James Johnson 68 Vice Chairman of Perseus a Merchant Banking Private equity firm. Also a director of Goldman Sachs Group. At the age of 68 with 13 years of tenure on the board he is probably a candidate for replacement in the near future.

John G Stumpf 58 Chair, President and CEO of Wells Fargo. Full time CEO. Does he really have the time to pay attention to Target.

Douglas Baker 54 24 year veteran of Ecolab where he is now President and CEO.

The board has clear strengths on retail/consumer with a smattering of financial engineering. Three active duty CEO or COO probably find themselves short for time but the CEO is a seasoned merchant.

This group has figured out a way to include the very new Chief Operating Officer of Yahoo onto the board. Very different from the JCPenney experience.

George Gutowski writes from a caveat emptor perspective.