Sell J.C. Penney: Too Much Change Too Soon [View article]
Agreed jcp overhaul of the way it does business " too much change too fast for the established and profitable business". The new regime did correctly identify company cost structure (sg&a) was significantly out of line with its competitors(Kohl's,Mac... and initiated an aggressive cost cutting of nearly 1 billion by 2014. Company now believes these cost cutting measures will be completed by 2013 giving major leverage to current profitability.. If only they would have taken these cost saving initiatives while only making tweaks to its business plans the stock would be up 25% instead of where we are at. The Ackman/Vernado activist correctly identified the cost saving opportunity but didn't foresee the overhaul marketing /pricing strategy as being the driver of lost sales and profitability. Ackman and board should have seen this coming and could have put measures in place to make this a gradually transition as mentioned. The only saving grace now is to drive stock price to multi-years lows and accumulate shares for a nice double/triple in the next few years.
Sell J.C. Penney: Too Much Change Too Soon [View article]
jcp overhaul of the way it does business " too much change too fast for the established and profitable business".
The new regime did correctly identify company cost structure (sg&a)
was significantly out of line with its competitors(Kohl's,Mac... and initiated an aggressive cost cutting of nearly 1 billion by 2014. Company now believes these cost cutting measures will be completed by 2013 giving major leverage to current profitability..
If only they would have taken these cost saving initiatives while only making tweaks to its business plans the stock would be up 25% instead of where we are at. The Ackman/Vernado activist correctly identified the cost saving opportunity but didn't foresee the overhaul marketing /pricing strategy as being the driver of lost sales and profitability.
Ackman and board should have seen this coming and could have put measures in place to make this a gradually transition as mentioned.
The only saving grace now is to drive stock price to multi-years lows and accumulate shares for a nice double/triple in the next few years.