JCPenney: How are they doing?

Some may know that last year JCPenney had a difficult time. The company's new CEO took a radical approach to bring in a younger, wealthier market that largely backfired. (Go to this previous blog post of mine to learn more.)

To fix these problems, now CEO Myron Ullman did something bold: he went with honesty.

The commercial above proves that it is a sincere attempt to get their loyal customers back in their stores. However, it is difficult to tell if this approach is working.

Support
 
There was a lot of support from key stakeholders when Ullman took over in the middle of 2013, but at the end of the year that support waned. Soros Fund Management, one of the hedge fund industry's most closely watched investors according to Herbst-Bayliss, left JCPenney at the end of 2013.

Soros has earned it's investors about $40 billion, so when it backed JCPenney soon after the abrupt change in CEO, worries over the company's well-being subsided. Soros leaving JCPenney has recreated that worry.

Furthermore, over the last year JCPenney's stock prices have fallen over 60 percent and shares have lost 86 percent of their value since February 2012. 

Cutting Costs

Ullman also announced in January of 2014 that they will be closing 33 stores around the country, affecting 2,000 jobs. Ullman remained optimistic in his statement of the closings, saying that they want to close their 'underperforming' stores so that JCPenney can ready 'for future success'.

The only store closing in Colorado will be in Colorado Springs at the Chapel Hills Mall. Take a look at the full list (linked towards the beginning of the article). 

Sales

Despite what seem to be hard losses to come back from, Ullman is very positive about the future of the company. They reported that their key revenue measure grew 2 percent over the holiday season. In November and December, the sales metric rose 3.1 percent.

A good point D'Innocenzio and Chapman point out though is that many stores greatly discounted this past holiday season to bring in customers due to the state of the economy. They say it is unclear what kind of sales gains "came at the expense of profits" for JCPenney.