NEW YORK (TheStreet) – J.C. Penney (JCP) interim CEO Myron “Mike” Ullman has done a good job at stemming the bleed, turning sales around, replacing private brands and filling the coffers. However, no matter what Ullman does, it won’t fix the underlying problem at J.C. Penney – that when it lost nearly a quarter of its sales under the previous regime, once a customer goes, it’s hard to get them to come back.
J.C. Penney shares have fallen 26% over the past 12 months -- a disappointing result for shareholders even as the company climbs its way out of the hole it found itself in under former CEO Ron Johnson. This comes in the face of stores like Macy’s (M) that offer either more value for their dollars or a better consumer experience.
“Ullman is the right man in this tough situation because he needed to bring some semblance of order, some semblance of stabilization … of teamwork back,” said Robin Lewis, CEO of The Robin Report newsletter and co-author of The New Rules of Retail – Competing in the World’s Toughest Marketplace in a phone interview.
Lewis estimates that during Johnson’s tenure, Macy’s took roughly 25% of J.C. Penney’s market share, specifically consumers within the upper-economic stratosphere of that demographic.
There are signs of hope though, including a brand new store located in Brooklyn, N.Y., that exemplifies the future of the J.C. Penney brand. The new store is smaller -- at 124,000-square feet – has a more contemporary look, and is located in a “high potential” market that will feature both private and national brands, the company said on August 5. J.C. Penney has roughly 1,100 stores according to it 2013 annual filing. The company said earlier this year that it planned to close a handful of underperforming stores.