Why hasn't J. C. Penney (JCP) figured out less is more?
Ron Johnson hit the CNBC airwaves (AGAIN) today to give investors a laundry list of why JCP is still on track to becoming "America's Favorite Retailer." Problem is RJ's credibility has plunged more than the stock price since he took the reins.
At this point it would be a better idea for Johnson and Ackman to keep their heads down until they have something real to tell us. We are not interested in hearing how JCP is on the right track after you have burned $1B in cash, increased a revolver (that you apparently "may" tap at some point) and sent discount hungry shoppers running for the exits to the tune of an estimated minus-30%-plus comps for Q4?
While I was waiting in the green room wings to do a post RJ follow up on CNBC I could not believe what I was hearing. Here are a few highlights:
- In July RJ told investors not to use the word sale. Call it a gift. Don't use that nasty word. Apparently now it is ok to use the dirty word. In fact RJ says he is sorry he didn't start with the word from the beginning? OK at least we got that straight. Sales ARE back.
- RJ still asserts customers know the right price. I disagree. Customers know when they see a discount. Perception is reality. The compare program or a reference point does not make consumers feel they are getting a deal. Last week I received an email for a Valentine's Day pendant with and EDLP (every day low price) of $60 but the appraisal value was $70 to $75. Does that make me feel good about it? JCP thinks so. I do not.
- A coupon is not a coupon but $10 off a $10 purchase acts like a coupon, according to RJ. Self-explanatory confusion. If I tell you Barney is yellow you should believe me.
- JCP will return to growth this year. What? Really? This is about as credible as last year's guidance. We know how that worked out.
- Today we were told JCP is still on track to add shops this year with the goal of 40% of the store being transformed by Back-to-school. Take that, analysts who are implying otherwise.
- If Ron had to do it over again he would do it "almost" the same. Maybe some different tactics. Oh no he didn't follow that with a Google/Apple analogy.
- Stores are busy. If comps are minus-30%-plus this quarter what does slow look like?
- Will JCP tap the revolver? JCP says it will transform the company with cash on hand, but that doesn't mean it won't use revolver at some point. That sounds like a yes to me
- Team has done great job of managing cash. They have burned $1B. And from my view they are going back toward the strategy they started with.
- And my favorite? RJ suggests some investors are trying to make short term money in artificial ways. Little jab at the shorts. I'm not sure how investors could possibly view this stock other than in the short-term.
Full disclosure this long-term JCP bear bought stock yesterday. When the NY Post and late to the game sell-siders pile on the dismal quarterly news just may be in the stock. For now that is.