Whether you believe J.C. Penney Company, Inc. (NYSE:JCP) can be saved or not, it is hard to deny that CEO Ron Johnson is the ideal person to be at the helm of the troubled retailer. While 2012 was a difficult year for the company and its investors, Johnson portrayed himself as a visionary who is not afraid to admit fault, who can make the necessary changes, and above all else, who can move things forward. The company has already endured a tremendous shift, and there is much left to go before it can be guaranteed that it does not go the way of the dinosaur, or payphone, or postal service on Saturdays. One thing, though, is for sure — Ron Johnson is one of the greatest retail chiefs in the business.
While it would be enough to justify Johnson’s talent by simply mentioning the words “Apple Inc. (NASDAQ:AAPL) Store,” I somehow feel compelled to defend the J.C. Penney showrunner from the legions of bears who can’t fathom a future that holds a thriving, successful JCP. Sure, the company didn’t do as well as Johnson (or myself, for that matter) had promised and hoped. Third-quarter same-store sales were about as bad as they get — down 26% year over year. But can’t people admit that this is quite possibly the largest transformation ever undertaken by a public company of this size? And, being such a formidable challenge, isn’t it reasonable to accept it is a multiyear effort?
Ron Johnson admits that mistakes were made in 2012 — the first full year of transformation for J.C. Penney. The elimination, and reintroduction, and re-elimination of coupons was confusing to shoppers, and ultimately alienating for some. The abrupt abandonment of a decades-old model shocked some of the store’s core shoppers — old ladies with limited income. The result was a short-term plunge that killed what little motion the company had going from its past before its future was allowed to take off.
Let’s get over the past, folks. It is of no surprise at this point that the old big-box model is holding hands with the PC and walking into the fields of Elysium. Stop dwelling on the failed model that the company has long left in the dust, and allow the new one to take a shot.
In a CNBC interview on Wednesday, Ron Johnson said he is confident that 2013 will be a year of growth for J.C. Penney. You might say that shouldn’t be hard to do, given the dismal results of 2012; but this is an inflection point. If you have been to one of the still-few renovated stores, you may have noticed something different — it’s not completely empty. While less than 15% of current floor space has been converted to the new “jcp,” it is earning $269 per square foot — $135 more than the old model, or about double. This hasn’t been enough to excite investors and analysts — but it should be.