This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

The War Over J.C. Penney

NEW YORK ( TheStreet) -- When the late, great James Cash Penney founded a store under his own name in 1902, in Kemmerer, Wyoming, he doubtless never imagined that over 110 years later people all over Wall Street would be fighting over his legacy.

Penney himself was broken by the 1929 stock market crash, according to his Wikipedia biography, but he remained active after losing control of the company, reportedly even teaching a young trainee named Sam Walton on how to wrap packages with a minimum amount of ribbon in Des Moines, Iowa, in 1946.

Instead of pushing that image of frugality, Ron Johnson, the man chosen for the CEO's chair by hedge fund manager Bill Ackman at the end of 2011, tried to re-make it as a high-end, high tech "experience." He wanted to end sales, to turn the stores into a series of branded shops, and to have cashiers walk around the stores carrying iPads for instant check-out.

He broke the company instead. Sales fell by nearly one-third, year over year, and $1 in every 10 went to losses.

Today, J.C. Penney (JCP) is a classic battleground stock. Reports that CIT had stopped funding product shipments collapsed the shares, which fell from $16 to $14.60 in the last hour of trading on July 31. Those reports were subsequently denied, and Experian Marketing Services put out a report that Penney was doing great in back-to-school sales, at least online. The shares were expected to open at $15.50.

That Experian story may have been something of a head fake. It was talking only about online sales, not in-store sales. But you have to also wonder about the origins of the CIT report, which seemed aimed at tanking the stock. To an extent, this is also about Ackman of Pershing Square Capital Management, who is fighting a rear-guard action on behalf of his Herbalife (HLF) short. Crush Penney and he may surrender on Herbalife, the thinking goes.

Somewhat lost amid all this is Mike Ullman, the former JCPenney CEO who was rehired in April to try and clean up the mess Johnson left behind. Ullman quickly brought back the old Penney mainstays, like sales and coupons, and went right to work on the financing problem.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,042.90 -28.32 -0.17%
S&P 500 1,972.29 -5.51 -0.28%
NASDAQ 4,493.39 -12.4620 -0.28%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs