Can Penney's Ullman Avert Train Wreck?

 | Apr 08, 2013 | 6:58 PM EDT  | Comments
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Mike's a good man, but it just might be too hard to save. I am talking about the overthrow of Ron Johnson at JC Penney (JCP) and the possibility of coming back from down 30% comps, a possibility that is unheard of in recent times in the department store business. I just don't know if interim CEO Mike Ullman has it in him to patch things up until a full-time CEO comes in.

I worry about JC Penney. My late mom worked at Lit Brothers and my dad at Gimbel's. One of the reasons I was so negative about what was happening at Penney is that I have seen these kinds of companies collapse in no time. They just have horrendous economics when things go bad and I think the main reason why it was essential to bring Ullman back is that Ullman will tell the creditors straight and can be counted on to get the company through Christmas which, believe me, is the big worry as I am sure that the creditors are scared to death of this situation.

I think there were a lot of things said about Penney in the last year by management that simply were way too optimistic and I am not just talking about the 29% through the turn comment by Johnson. This company had been doing well as recently as 2005. Even as it underperformed the majors in the last years of Ullman's tutelage, it always had a fighting chance to turn around. People sure believed Johnson could do it.

The common stock's down badly because I think that it's dawning on investors how bad things really must be. I am sure there are others who say, "Oh no, Ullman again, he was terrible."

I don't think the issue is where the common will go. I think the issue is squarely whether the company will survive and I think it has a better chance of surviving with Ullman at the helm for now than anyone else. I mean if it were really about to close, why would Ullman bother, other than to say "I told you so" as his mistreatment by Johnson was the stuff of legend.

I am glad the Johnson era is over. Now maybe we can stop talking about some retailer that really isn't nearly as important as the media made it, but then again, the media loves a good train wreck, and this certainly defined the word.

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