J.C. Penney Company, Inc. (JCP) Takes Another Hit: Vornado Realty Trust (VNO), Macy’s, Inc. (M)

The fight ahead
For all of the bad news, the legal wrangling is still anybody’s game. While Judge Oing has been pronouncing against J.C. Penney, he also shot down a similar injunction last year. That’s one of the things complicating the case — there are odd player interactions. Macy’s filed two injunctions last year, one against Penney and one against Stewart. The Stewart injunction was upheld but the Penney injunction wasn’t. The judge admits that this is all pretty confusing, but that hasn’t stopped him from plowing ahead with all sorts of snippets like the one above.

The effects of the case seem to be heavily weighted in Macy’s, Inc. (NYSE:M) favor right now. The company is doing well, and is allegedly not overly reliant on Martha Stewart’s line. Martha Stewart is also on the rocks, with the stock falling 44% over the last 12 months. Cutting off the lucrative J.C. Penney Company, Inc. (NYSE:JCP) contract could be horrible news, and set a bad precedent. J.C. Penney is also relying heavily on the deal. Not only will it be selling the merchandise, it also holds 17% of Stewart’s stock.

The bottom line
I think a lot of J.C. Penney’s current mess lays squarely on the shoulders of Johnson. He seriously needs to rethink his long-term plan, and investors need to be absolutely clear on what they demand from him. With Vornado Realty Trust (NYSE:VNO) turning its interest level down, there’s going to be a chance for other big investors to take a larger role in the direction of the company. Given Ackman’s previous antics, I wouldn’t be surprised to see him piping up over the next month.

For investors, the bottom line is inconsistency. The plan hasn’t been executed as promised, the future of the Macy’s, Inc. (NYSE:M) litigation is all but unknowable, and the big names attached to the stock are in motion. Until all that settles down, and until Johnson articulates how the company moves from where it is to where it needs to be, I’d stay well clear of J.C. Penney.

The article J.C. Penney Takes Another Hit originally appeared on Fool.com and is written by Andrew Marder.

Fool contributor Andrew Marder has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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