Will ‘Big and Tall’ Save JC Penney?

Bombfell is trying to do for men what Stitch Fix Inc. (NASDAQ: SFIX) pioneered for women and led to November initial public offering for the women’s clothing subscription service that raised $120 million. The shares went out at $15 and closed Friday at $23.60. The company’s market cap is $2.25 billion.

J.C. Penney’s market cap at Friday’s close is just over $1 billion, so the company is right to try anything to boost its sales and profits.

The J.C. Penney-Bombfell service works just like other subscription clothing services. The price range for a box of big and tall clothing will range from $15 to $120. Customers only pay for what they keep, plus they pay a $20 styling fee.

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According to a report at the Dallas Morning News, Bombfell’s annual sales totaled just $20 million last year. The start-up will also have to go head-to-head with Stitch Fi, which has recently kicked off its own men’s clothing box service. Stitch Fix expects sales of about $1 billion this year and claims to have 2.2 million customers.

Going after the big and tall men’s market limits J.C. Penney’s to about 11% of the men’s clothing market, but it is a market that has been underserved. Most subscription services don’t offer big and tall sizes, but that is almost certain to change. Nordstrom’s Trunk Club service, for example, has begun offering both men’s and women’s clothing in larger sizes.

Getting into the subscription clothing business is a good idea, but it is a nascent business that will take time to grow. J.C. Penney does not have a lot of time to spare.

J.C. Penney stock closed down about 1.5% on Friday, at $3.22 in a 52-week range of $2.35 to $10.20. The stock’s 12-month consensus price target is $3.61.

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