Tradition indicates that one shears sheep. I think that contrarians are also sheared. Sheep congregate in flocks. It is investors that gather in herds. I wonder if they will collect bags of wool in place of money?
Online shopping is great. It is a business that is separate from brick and mortar. Internet presence is not JC Penney's "Biggest failure." Their failure is that they ignored the assets that they already own, their stores.
Web sales should pay for web operations, and store sales should be charged to operations that involve physical presence. If a retailer discovers that one of these is not working well they should fix it or shut it down.
Its great to discover someone who understands the difference between "Tactic" and "Strategic."
I mostly agree with you excepting that in addition to tactical errors committed by JCP, management that they also committed gigantic strategic errors in attempting the change the image of their stores that were embedded in the minds of their customers for the last hundred or so years. It seems to me that they are modeling after Montgomery Ward, and are headed in the same direction.
You have many problems in addition to declining traffic. There is the Internet, abandonment of your mall's maintenance and the unseen factor that you are competing against merchants like JCP and Radio Shack that lose money, and continue to lose money since much of their losses are paid for by their stockholders.
look at http://www.deadmalls.com to discover what is occurring in dead malls. Negotiate with your landlord for lower rental, but most importantly get out of dead areas. Take a chance and find quality space, find a product line that is not oversold at large retailers and supply your customers with "Super-service." Look for my next article about Tuesday Morning, a chain that occupies secondary space. They are declining because they remain in stores that no longer are desirable.
You're a shopper, not JCP management, yet you clearly see what is wrong with JC Penney. You're analysis is correct, down to the last detail.
Penney stock rose 4.02% today. Investors probably didn't read Piper Jaffray's estimate of a 32% drop in same store sales during the month of November. Rather they must be following the prediction from Bill Ackman that JC Penney will earn 6 bucks a share by 2015.
I am happy that you mentioned BBBY's coupons. They are an important component of BBBY's success. My markup charts indicate that the coupons have little effect on BBBY's bottom line. I am an ex-retailer, and understand the value of meaningful promotion. I think about BBBY and JC Penney whom I just wrote about (http://seekingalpha.co...). JC Penney attempted to implement a one price policy, and rid them self of all the complications that promotion involves. Their plan failed. The insanity of the market place is that Penney rose in price by 3.43% today and BBBY rose by only .07%. This figures show why we small investors still have a chance to do well.
Dean: It’s interesting that you say that BBBY is already discounted. I’m a proponent of Burton Malkiel and “Efficient-market hypothesis”, which suggests that an equity price is correctly valued since all available knowledge is available. It is clear that this view, by itself, if correct, leads one to know nothing about the future value of an equity. To play the game I add another factor. It is the value of sentiment. When sentiment is low I buy, when it is high I sell. To directly answer your question, you and I are in the same ball park, $55 is my price. I have delayed a purchase since I promised Seeking Alpha that I will not trade for 72 hours from the publication of my article. A common strategy I might entertain because I am convinced that I will take a position in BBBY is to short a put at $55. for one month. If BBBY increases I will have a small profit and lose my chances of immediate gain. There are many other opportunities in the market. If it decreases I will make my purchase at less than $55. I still can’t rid my character of my trader instinct.
Alan: You are very perceptive. I, 100%, agree with you. BBBY was infinitely healthier than LIN. My comment, “Many analysts gave the edge to Linens N Things” was about the past. I refer to the years 2001 to 2004 when the two of these giant retailers of domestics were fighting out in the market place. Linens became the pet of retail analysts even though careful inspection already hinted at difficulties. I acquired the high and low prices from LIN and BBBY for the ending quarters of the years 2001 - 2004 from their 10K’s. I averaged the highs and lows from each quarter for each of these companies then averaged the sum of the high and the low averages for all 4 quarters of each year.
The results for BBBY:
2001 to 2002 by +14% - 2002 to 2003 by +18% - 2003 to 2004 by -2% The results for LIN
2001 to 2001 by -1% - from 2002 to 2003 by -5% - 2003 to 2004 by +16%. How strange when the seeds for Linens N Things demise were already in place that their stock did so well near the end!
I know that Q4 is upcoming. I want you to wait for Q1 because that is, according to my calculation, the time when the existing cash will be gone. I don't need to give evidence that boutiques are not working so that an investor might make a proper decision. An investor needs evidence that they are working. I am glad that you understand that retail data for a 2 to 3 month period does not apply well for a year's prediction of success. Analysis is about opinion not proof.
Milkweed: If you watched the Q3 presentation you would have seen the claim of "$269 a square foot. The old jcp is generating $134 a square foot." Quote proper numbers! Great sample period: Data from August and September, and compiled in November. Do these results include kids haircuts and the space used for 40,000 manikins? If you think Penney's has plenty of cash then look at the upcoming Q1 report. You'll be surprised. You might know that "Everyday low prices" is a minor aspect of jcp, but the customers do not. A loss in faith is not easily cured.
I am disappointed that you think my thoughts about JC Penney are misguided, and that my stated facts are difficult to separate from my opinion. The facts that I have included in my article are clearly presented as facts. A fact is an event that has really occurred. It is not something that is evaluated by the unknowing nor is it something that has been granted by GOD. Read what I have written again. Review my thoughts in a few months while noting the price of JCP.
There is no reason to fear being short as one is easily protected.
J.C. Penney: Rising From Its Ashes [View article]
Tradition indicates that one shears sheep. I think that contrarians are also sheared. Sheep congregate in flocks. It is investors that gather in herds. I wonder if they will collect bags of wool in place of money?
J.C. Penney: Rising From Its Ashes [View article]
You're wrong! Ron Johnson expects JCP to fall in the same category as Tiffany.
Send me a note in a few months if your confidence with JCP paid off.
I'm anxiously waiting.
J.C. Penney: Rising From Its Ashes [View article]
Online shopping is great. It is a business that is separate from brick and mortar. Internet presence is not JC Penney's "Biggest failure." Their failure is that they ignored the assets that they already own, their stores.
Web sales should pay for web operations, and store sales should be charged to operations that involve physical presence. If a retailer discovers that one of these is not working well they should fix it or shut it down.
J.C. Penney: Rising From Its Ashes [View article]
Its great to discover someone who understands the difference between "Tactic" and "Strategic."
I mostly agree with you excepting that in addition to tactical errors committed by JCP, management that they also committed gigantic strategic errors in attempting the change the image of their stores that were embedded in the minds of their customers for the last hundred or so years. It seems to me that they are modeling after Montgomery Ward, and are headed in the same direction.
J.C. Penney: Rising From Its Ashes [View article]
You have many problems in addition to declining traffic. There is the Internet, abandonment of your mall's maintenance and the unseen factor that you are competing against merchants like JCP and Radio Shack that lose money, and continue to lose money since much of their losses are paid for by their stockholders.
look at http://www.deadmalls.com to discover what is occurring in dead malls. Negotiate with your landlord for lower rental, but most importantly get out of dead areas. Take a chance and find quality space, find a product line that is not oversold at large retailers and supply your customers with "Super-service." Look for my next article about Tuesday Morning, a chain that occupies secondary space. They are declining because they remain in stores that no longer are desirable.
J.C. Penney: Rising From Its Ashes [View article]
You're a shopper, not JCP management, yet you clearly see what is wrong with JC Penney. You're analysis is correct, down to the last detail.
Penney stock rose 4.02% today. Investors probably didn't read Piper Jaffray's estimate of a 32% drop in same store sales during the month of November. Rather they must be following the prediction from Bill Ackman that JC Penney will earn 6 bucks a share by 2015.
Good Luck
Will BBBY Take You For A Bath? [View article]
vs
Bed Bath & Beyond
Stock Prices for years 2001 to 2004
http://seekingalpha.co...
Will BBBY Take You For A Bath? [View article]
Will BBBY Take You For A Bath? [View article]
We’re together with the $55 price.
Read my reply to the comment of dean 1111 above. It applies to your remark.
Will BBBY Take You For A Bath? [View article]
It’s interesting that you say that BBBY is already discounted. I’m a proponent of Burton Malkiel and “Efficient-market hypothesis”, which suggests that an equity price is correctly valued since all available knowledge is available.
It is clear that this view, by itself, if correct, leads one to know nothing about the future value of an equity. To play the game I add another factor. It is the value of sentiment. When sentiment is low I buy, when it is high I sell.
To directly answer your question, you and I are in the same ball park, $55 is my price. I have delayed a purchase since I promised Seeking Alpha that I will not trade for 72 hours from the publication of my article. A common strategy I might entertain because I am convinced that I will take a position in BBBY is to short a put at $55. for one month. If BBBY increases I will have a small profit and lose my chances of immediate gain. There are many other opportunities in the market. If it decreases I will make my purchase at less than $55. I still can’t rid my character of my trader instinct.
Will BBBY Take You For A Bath? [View article]
You are very perceptive. I, 100%, agree with you. BBBY was infinitely healthier than LIN. My comment, “Many analysts gave the edge to Linens N Things” was about the past. I refer to the years 2001 to 2004 when the two of these giant retailers of domestics were fighting out in the market place. Linens became the pet of retail analysts even though careful inspection already hinted at difficulties.
I acquired the high and low prices from LIN and BBBY for the ending quarters of the years 2001 - 2004 from their 10K’s. I averaged the highs and lows from each quarter for each of these companies then averaged the sum of the high and the low averages for all 4 quarters of each year.
The results for BBBY:
2001 to 2002 by +14% - 2002 to 2003 by +18% - 2003 to 2004 by -2%
The results for LIN
2001 to 2001 by -1% - from 2002 to 2003 by -5% - 2003 to 2004 by +16%.
How strange when the seeds for Linens N Things demise were already in place that their stock did so well near the end!
If you want a copy of my analysis send me a note.
J.C. Penney: Rising From Its Ashes [View article]
J.C. Penney: Rising From Its Ashes [View article]
J.C. Penney: Rising From Its Ashes [View article]
Read what I have written again. Review my thoughts in a few months while noting the price of JCP.
There is no reason to fear being short as one is easily protected.