After engaging an attempt to reinvent itself and failing in it in 2012, J.C. Penney Company, Inc. (NYSE:JCP) has been desperately trying to carry out a turnaround. It has not been an easy task. The company is a national department store chain which has failed to differentiate itself from other companies –in brand names and vendor relationships- and has been thus suffering the consequences. The highly competitive retail industry in which it operates is leaving less and less room for mistakes. As a consequence, the firm has seen its financial position deteriorating rapidly.
Management has only been able to cast a shadow on the company’s future by helplessly trying to recreate the past. The impossibility of accomplishing that is clear, and has been left out in the open by the decisions Bill Ackman and Steven Roth have recently made.
Last Agust, Pershing Square Capital Management LP’s, Bill Ackman, decided to sell –for almost half the price he had paid— all of his 39.1 million shares. Eventough it was a rather controversial purchase, Ackman gave a good try to bring new life into J.C. Penney Company, Inc. (NYSE:JCP). For three years he embarked himself upon the mission to revive the retailer. He even recruited a new CEO to make stores more attractive to shoppers and upgrade its merchandise. The sale of his stake and a 25% drop in sales last year, were only the beginning of throwbacks for the company.
Last Friday, Vornado Chairman and CEO, Steven Roth resigned to his place in the board of the department store. He announced at an investor conference that he plans to sell his 13.4 million shares, having already sold almost half his stake earlier this year. He had acquired a 9.9% stake in the company at the same time Bill Ackman bought his, hoping to gear the changes that would reinvent J.C. Penney Company, Inc. (NYSE:JCP) and make it appealing to younger shoppers.
The outline on J.C. Penney Company, Inc. (NYSE:JCP)’s future remains undefined –to say the least. Customers, as well as long-term investors, will be hard to win back for the company. A real turnaround might possible, but still remains far away in the distance.
Disclosure: Pamela Gaviño holds no position in any stocks mentioned