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Don't buy rumors J.C. Penney (JCP -10.6%) may have a buyer, or a savior CEO will be brought in,...

Don't buy rumors J.C. Penney (JCP -10.6%) may have a buyer, or a savior CEO will be brought in, writes Jeff Matthews. Steven Roth sold not because he was in trouble, not because of a margin call, but because he wanted to sell. Roth's as tied in as they get and he's on the board - would he be unloading his stake if he had an idea something game-changing was imminent?
Comments (10)
  • Death spiral
    5 Mar 2013, 05:18 PM Reply Like
  • ...I guess they are going to let RJ destroy JCP. They probably can't afford his $10 million severance package, so they have no choice but to let him finish JCPenney off. I think they should bring in a savior CEO, and sideline RJ like Micheal Vick. Get him to leave quietly without the severance!
    5 Mar 2013, 05:44 PM Reply Like
  • Roth sold because he had a break point re the performance of his fund. It is about the math for anyone. While not encouraging info, the only real news that counts is comp sales for the first quarter.
    5 Mar 2013, 05:45 PM Reply Like
  • As one co-worker said today, "give me the gun, I'll do myself....". LOL.
    5 Mar 2013, 07:09 PM Reply Like
  • People, you gotta understand what was the reason that Vornado got into JCP at first place.

     

    Vornado is a REIT, so its strategy and focus must be primarily focused on real estates.

     

    Initially, their teaming up with Bill Ackman must be like this (my own reasoning, not that I have their internal report to me): get JCP turned around (even not that much), then split the Real estates from the retailing side and Vornado to manage / benefit the real estates. Ackman is a hedge fund manager and can do anything he wants.

     

    Now, since the turn-around does not look like to happen overnight, and the potential of a real estates spun-off looks even more unlikely in several years, as a REIT, Vornado GOT to sell this pure retail turn-around story. Otherwise, its board would question CEO (gone) and Chairman's judgement and could go for their heads.

     

    So as you can see, Vornado's sale of JCP is purely strategic - due to its mandate as a REITs. I don't think it's a judgement call that reflecting Vornado's view that JCP is doomed.

     

    Now back to the retailing JCP: how many times you have seen in the history that a nation-wide retailer goes belly up in a single year? I can assure you, it is ZERO.

     

    At the worst, JCP can simply reverse everything Johnson has done and go back to its old self, with more than daily proms, etc, to generate sales like $150/SF. At the beginning of RJ's tenure, JCP is worth like what, $6 bn. Write down $1 bn or so assuming they are simply 'wasted', then still you got a $5 bn market cap company.

     

    That is just a simplistic baseline and the real potential of JCP would be much much higher. But everyone need to keep your head cool and be a little patient.

     

    Now for the JCP stock: Vornado sold 10 mn shares to DB, reported at $16 and change. Now what you think people in DB are, total idiots (some are, but definitely not everyone :-)). So if they take risk and bought JCP at $16/shr, what do you think how much DB value JCP? You still want to sell at $15? then you must be a total idiot then, and no more word waste for you.
    5 Mar 2013, 07:33 PM Reply Like
  • I'm guessing your long JCP at a higher price...?
    5 Mar 2013, 08:29 PM Reply Like
  • My suggestion: also include net debt into your considerations - and the future interest payments that are related to additional debt. A write down of only USD 1bn of "the inititial worth" of USD 6bn seems pretty optimistic to me.
    6 Mar 2013, 08:14 AM Reply Like
  • It's interesting that Johnson has been paid so much to do this to JCP. It is a shame to look at the series of events that have led up to or rather down to where the company finds itself. I don't mean to be a skeptic but I doubt that JCPenney will ever be even a shadow of it's former self. Thank goodness I followed the advise of a broker some years ago and sold almost all of the stock and chose another option in the savings plan.
    5 Mar 2013, 11:38 PM Reply Like
  • JCP is doing nothing right, the only thing worse than their unworkable strategies is their poor execution. Their new advertising is horrible, hundreds of 10 seconds spots that say elsewhere price, JCP price too fast for customers to understand, their signing and price comparisons on their private brands is absurd and not at all credible. JCP skirts $25 elsewhere $59 and up. Their size scales are for only young people with tiny bodies even in Men's and Women's. Their size specs are way too small. The remote control check out machines are located 50-100 yards away from their printers to make receipts. Their stores are not at all set to do business this spring. Joe Fresh space closed off about 1200 feet at mall entrance to open March 15th? Too late. Their Home Store has very little merchandise all 19,000 square feet and won't until it opens in May. No way can they have positive comps in Q1. Their margins will be another disaster in Q1 just like Q4 saleing on top of everyday low prices. RJ is in a total dream world and is delusional. The home goods coming in May is way out colors that won't work it will be a learn like the crazy colors that did not work in Men's. I could go on for hours, but plain and simple things are getting much worse fast.
    6 Mar 2013, 04:17 AM Reply Like
  • I saw the new stores and the idea of a store in a store is good,saves them money and makes the store more of a novelty.
    6 Mar 2013, 04:31 AM Reply Like
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