J.C. Penney Company, Inc. (JCP): Will Perry Capital And Vornado Also Sell?

With Bill Ackman now gone from J.C. Penney Company, Inc. (NYSE:JCP), investors may be inclined to bet on a turnaround. Since Ackman championed the hiring of Ron Johnson (who put the company in its current predicament), his exit could allow the retailer to get back to its old ways.

J.C. Penney Company, Inc. (NYSE:JCP)

Unfortunately, while the old J.C. Penney Company, Inc. (NYSE:JCP) may have been profitable, it was far from a great company. Department-store stocks in general have not performed well in recent months, and Ackman isn’t the only big-name investor that could be looking to sell.

Ron Johnson was hired for a reason
In a recent letter to his investors, Ackman notes that he wasn’t the only one pushing for Ron Johnson; rather, the decision to hire the former Apple retail guru was unanimous among J.C. Penney Company, Inc. (NYSE:JCP)’s directors. It’s worth remembering the state J.C. Penney Company, Inc. (NYSE:JCP) was in prior to Johnson’s hiring.

Ackman’s fund, Pershing Square, gave a presentation about the company in early 2011. Pershing Square noted that sales per square foot were down to 2002 levels, while the stock traded at a discount to its peers.

A year later, (then newly CEO) Johnson gave his own presentation about J.C. Penney Company, Inc. (NYSE:JCP). He noted that J.C. Penney Company, Inc. (NYSE:JCP) had one of the oldest and poorest base of customers, and that the department- store business in general was in decline.

Department stores haven’t been great performers
Johnson also remarked that, over the past 20 years, department-store market share had declined by roughly 26%. More recently, department-store stocks haven’t made great investments.

Kohl’s Corporation (NYSE:KSS), J.C. Penney’s most direct competitor, hasn’t noticeably benefited from its rival’s failings. Since the beginning of 2012, when Johnson began his turnaround plan, Kohl’s Corporation (NYSE:KSS) shares are up just 3% — the S&P 500 is up more than 30% over the same period of time.

Analysts at Morgan Stanley downgraded Kohl’s Corporation (NYSE:KSS) back in March to Underweight, then reiterated that downgrade in May. In August, Kohl’s reported earnings that showed a decline from the prior year, and cut its guidance for all of 2013.

That trend may have just been company-specific, but Macy’s, Inc. (NYSE:M) hasn’t fared much better.

Although Macy’s, Inc. (NYSE:M) shares have outperformed the S&P since the start of 2012, recent trends have not been positive. Macy’s, Inc. (NYSE:M), too, reported a disappointing quarter in August, and then cut its guidance for the year. Analysts at Maxim Group cut Macy’s, Inc. (NYSE:M) rating to a Hold with a $48.50 price target.