Retail

J.C. Penney Outsources Turnaround

If The Wall Street Journal is accurate, J.C. Penney (NYSE: JPC) has hired turnaround firm AlixPartners to help it “identify cost savings and manage cash flow.” In other words, the battered retailer’s management, led by new and former CEO Myron E. (Mike) Ullman III, cannot create and execute a plan of its own. At a company that has gotten more negative press than any other large public corporation this year, except for maybe Apple Inc. (NASDAQ: AAPL), the new development will appropriately get it more.

The plan is all the more appalling because the J.C. Penney board signaled that Ullman’s past experience would bring it out of the nosedive created by defrocked CEO Ron Johnson. The AlixPartners move means that Ullman almost immediately decided he does not have that ability. J.C. Penney no longer runs itself. That will be left to outsiders.

The decision comes on the back of a year in which J.C. Penney’s sales dropped by about 20% on a larger drop in same-store sales. Internet sales, critical to the future of any large retailer, fell more than a third. The retailer’s cash position may not be large enough for it to make it through a potential turnaround, so financial institutions that will bolster the J.C. Penney balance sheet via loans will take quite a risk.

More than any other factor in the AlixPartners decision, it is the sign that J.C. Penney management does not have the ability to quickly pick which costs its should shed. Obviously, based on same-store sales, many of its locations must lose substantial amounts of money. Although there are severance and rent costs to close these, could any other decision improve the company’s fortunes? Such a decision would send what could be the most important short-term message to Wall St., that J.C. Penney has admitted it cannot sustain a model that no longer matches demand.

When a company sacrifices the process of charting its own future, it is a signal that it does not have one, at least not as a standalone operation.

Are You Still Paying With a Debit Card?

The average American spends $17,274 on debit cards a year, and it’s a HUGE mistake. First, debit cards don’t have the same fraud protections as credit cards. Once your money is gone, it’s gone. But more importantly you can actually get something back from this spending every time you swipe.

Issuers are handing out wild bonuses right now. With some you can earn up to 5% back on every purchase. That’s like getting a 5% discount on everything you buy!

Our top pick is kind of hard to imagine. Not only does it pay up to 5% back, it also includes a $200 cash back reward in the first six months, a 0% intro APR, and…. $0 annual fee. It’s quite literally free money for any one that uses a card regularly. Click here to learn more!

 

Flywheel Publishing has partnered with CardRatings to provide coverage of credit card products. Flywheel Publishing and CardRatings may receive a commission from card issuers.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.

AI Portfolio

Discover Our Top AI Stocks

Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.

You can follow him investing $500,000 of his own money on our top AI stocks for free.