J.C. Penney (NYSE: JCP) has been more lackluster in recent years than retail competition. To return to their target audience and perhaps reach them again, the mother announced J.C. Penney today that she wants to open 500 baby shops. This comes in the wake of Babies R & # 39; Us closing the store completely.
This was the last step in a series of retailers trying to enter the baby business. For example, Walmart (NYSE: WMT) is pushing the baby section of its website. Year after year, the search for babies has increased by 40%. Target (NYSE: T) has expanded its private label baby brand with a more complete collection of baby products. Amazon (NASDAQ: AMZN) also used Khloe Kardashian to push his own baby register.
The retail space was extremely interesting as e-commerce began to take over the United States. In what they call the "retail apocalypse," JCP has done far worse than its competitors. However, it has adapted more than many of its old and new competitors. JCP put devices back in its stores and offered home-based services in rooms lost by former giant Sears (NASDAQ: SHLD) – a business that has also closed stores. The eventual case of Sears will enable JCP and other retailers to become more involved in home services.
Where JCP went awry, writes Tertiary Capital, is its dedication to millennials under the tenure of former CEO Ron Johnson. After spending years chasing the younger generation, they return to their target group of middle-aged mothers. Therefore, there is not much in the earnings reports or 10K's to focus on the revival of JCP. With the company in its last legs, their only hope lies in their leadership. This is a worrying reality as the company's CEO currently consists of four people. The "CEO's Office" consists of CFO Jeff Davis, CCO Joe McFarland, CDO Therace Risch and Executive VP of Supply Chain Mike Robbins. Over the last seven years, the company has gone through three CEOs – but the next one is the most important so far. No one in the office has apparel experience that accounts for $ 12.5 billion in annual business revenue.
If that's not alarming enough, JCP is well on track to remain unprofitable in 16 of the last 18 quarters. This week's earnings report could lower its price further than the current $ 2.30. JCP also holds $ 4 billion in debt. Over the next two-and-a-half years, only $ 160 million in maturities will be due – allowing investors a brief sigh of relief. With creditors already tapped, JCP needs to take advantage of this cheap debt service to take some huge steps.
As you can see, JCP was gassed by its competitors. Although last month's perspective graphics, Macy's shares rose 59% over the year while Kohl's rose 36%. The good news for JCP is that a good profit in the next week can shoot the stock pretty high. If you are currently a shareholder, it would be a good time to hold. But with a stock that has consistently disappointed investors, it makes no sense to buy now. If a company continues to struggle in a booming economic period like this, it's time to move to leadership.
If earnings do not surpass analysts' gloomy forecasts next week, expect a change in the CEO's position. Chairman Ronald Tysoe recently said in an interview with the WSJ: "The challenge is to reinvent, but you do not want to spill the baby out with the bath," Tysoe said. "JCP must remain true to middle age Women who have made the company what it used to be, and the baby market is where JCP can correct its mistakes." JCP turned away from its core customer and tried to Doing a lot in the appliance industry.
On Aug. 16, 188 is the day JCP will release the profits, and this report, along with an upcoming CEO announcement, will determine whether this company will sink, float or carry on.
Disclosure: I / we have not mentioned any positions in any stock, and have no plans to initiate any positions within the next 72 hours.
I wrote this article myself and it expresses my own opinions get no compensation for it (other than looking for Alpha.) I have no business relationship with any company whose inventory is mentioned in this article.