J.C. Penney Company, Inc. (JCP), Best Buy Co., Inc. (BBY): Is This Troubled Retail Stock A Buy?

Best Buy has weathered this storm by matching prices, aggressive marketing, and has significant upside due to the balance that online sales tax creates. In the case of J.C. Penney, Ron Johnson was supposed to be the answer, but was not.

After J.C. Penney’s failed Ron Johnson trial as CEO, the company brought back Myron Ullman, but in the process, they have lost 10 senior staff. J.C. Penney has no chief marketing or chief technology officer, nor do they have a head of Home, which is one of their main segments.

J.C. Penney is a company without leadership, and with rumors surrounding its commercial lender CIT Group suspending its finance deliveries. Of course, J.C. Penney denies that CIT has suspended its financing activities, but a report from the reputable NY Post made headwinds on Wednesday with an article suggesting a CIT/J.C. Penney separation. Nonetheless, where there’s smoke there is fire, and I wouldn’t touch this stock.

Final Thoughts

With each passing month, J.C. Penney Company, Inc. (NYSE:JCP) begins to look like the next Circuit City rather than the next Macys. The company has burned through cash, is losing customer loyalty, has no leadership, and there are countless rumors that its relationship with CIT is in jeopardy.

Yet, company bulls hang on the fact that J.C. Penny’s online business is improving rapidly, and that it could supercharge the company’s growth. Unfortunately, J.C. Penney was late to this party as well, and online only accounts for 8% of total sales. Therefore, I see very little light at the end of this tunnel, and since the company’s more expensive that an improving Best Buy, I think more downside could come.

The article Is This Troubled Retail Stock A Buy? originally appeared on Fool.com and is written by Brian Nichols.

Brian Nichols is long BBY. The Motley Fool has no position in any of the stocks mentioned. Brian is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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