Things are looking grim for J.C. Penney.
The company’s stock began the year at a price of about $20 per share and recently traded around $13.
Earlier this month J.C. Penney reported that it lost $586 million in its fiscal second quarter with sales falling a disconcerting 12%.
And hedge fund manager Bill Ackman dumped his 39 million shares just this week, giving up hope for a rebound. He took quite a loss in the process; he purchased the shares for about $25 each and sold them for less than $13. This is a classic buy high, sell low approach.
At this point few people have much hope for the retail giant.
But I do.
J.C. Penney is a brand that totally lost its way under CEO Ron Johnson. Business school professors will be talking about the astonishing story for many years.
From J.C. Penney we can learn answers to important questions like this:
– What happens when you abruptly try to reposition a brand?
– What is the impact of a huge reduction in discounts?
– What do customers do when you insult them?
Ron Johnson is pursuing other interests and J.C. Penney is focusing again on its core customers. I suspect many of them will come back. Brand equity is powerful and lasting. J.C. Penney remains a relevant brand for many. When the selection and pricing are right, they will return.
It won’t be quick. The problem with retail is that buyers have to make decisions far in advance and resetting stores takes time. J.C. Penney can’t shift gears overnight. Over time, however, the company will rebound.
Look for the brand to surprise people in 2014.