Tag Archives: Penney Co

J.C. Penney: CIT Cash Advances Still Flowing to Suppliers

By The Associated Press

SAN BRUNO, CA - FEBRUARY 28:  A customer leaves a JCPenney store on February 28, 2013 in San Bruno, California.  J.C. Penney Co. reported a 31.7 percent drop in fourth quarter earnings with a net loss of $552 million, or $2.51 per share compared with a loss of $87 million, or $0.41 one year ago. (Photo by Justin Sullivan/Getty Images)

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Justin Sullivan/Getty Images

PLANO, Texas — J.C. Penney says that CIT, the largest lender in the clothing industry, is still supporting deliveries from its suppliers. The department store operator also says it has ample liquidity to run its business.

Shares rose more than 7 percent in premarket trading Thursday.

On Wednesday, a New York Post report said that CIT Group Inc. (CIT) had stopped providing financial support to small and large suppliers selling to J.C. Penney stores — for now. The report said CIT made the decision after meeting with J.C. Penney officials to examine the company’s books.

J.C. Penney Co. (JCP) said Thursday that CIT assured it that the newspaper report is untrue.

CIT is what the industry calls a “factor,” which makes cash advances to suppliers based on the goods they sell to the merchant. If vendors and factors become wary of a store’s creditworthiness, the retailer may have to pay suppliers cash upfront for goods, which could be a huge drain on liquidity. If suppliers stop shipping goods, it can be a death knell for a retailer.

Plano, Texas-based J.C. Penney said that merchandise from CIT-supported suppliers currently makes up less than 4 percent of its overall inventory for the year.

J.C. Penney said that it still has the support of all of its key vendors, which are continuing shipments to the company. The retailer, which has 1,100 stores, anticipates closing the second quarter with about $1.5 billion in cash on its balance sheet.

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Shares climbed $1.09, or 7.5 percent, to $15.69 in premarket trading about two hours before the market open Thursday.

J.C. Penney is trying to reverse its fortunes after disastrous results under a failed transformation plan implemented by its former CEO Ron Johnson. Johnson was ousted in April after 17 months on the job. The board brought back former CEO Mike Ullman, who has reintroduced frequent sales and is bringing back key merchandise under store names like St. John’s Bay.

Analyst Deborah Weinswig of Citi Investment Research says J.C. Penney won’t see a recovery in its business until 2014. The analyst said in a client note that she’s been surprised that “quick fixes,” like bringing back coupons, hasn’t led to stronger sales and doesn’t think this will change in the near term. The analyst lowered the chain’s rating to “Sell” from “Neutral” and cut its price target to $11 from $20.

J.C. Penney doesn’t comment on analyst reports.


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Source: FULL ARTICLE at DailyFinance

Can Returning CEO Ullman Revive Penney's Fortunes?

By The Associated Press

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NEW YORK — The return of the old guard at J.C. Penney have sent shares higher this week, even with major U.S. indexes suffering one of the worst downturns this year.

J.C. Penney brought back former CEO Mike Ullman to lead the company last week and he has already rehired one of his former executives forced out under Ron Johnson.

Johnson, the former Apple Inc. (AAPL) executive, was ousted himself last week after a disastrous 17 months at the helm.

The familiar faces have received a positive response on Wall Street, which has driven the stock up nearly 4 percent this week even as the S&P 500 slumped 3 percent.

At least one analyst that follows the company sees a precedent for Ullman’s second act.

Citigroup’s Deborah Weinswig said that bringing back old-hands worked successfully for BJ’s Wholesale Club in 2007, when Herb Zarkin as put back in the CEO‘s chair.

Zarkin rehired three key members of his former team to run merchandising, marketing and store operations. Over the next 12 months, revenue at comparable stores rose 3.7 percent, compared with the modest 1.2 percent increase in the prior-year period.

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One of Ullman’s first actions was to rehire Ken Mangone as executive vice president of product development, design and sourcing. He had left in December 2012. Nick Wooster, fashion blogger and a former executive at luxury stores such as Neiman Marcus who had taken on his role, is now out. Penney also announced this week that two other Johnson hires — Michael Kramer, chief operating officer, and Ken Walker, chief talent officer — are now gone.

Penney’s shares are still down 65 percent since early last year but investors appear to embrace an old familiarity.

Weinswig points out that Ullman had a deep bench that he could exploit.

“As of now, it’s a two-man band, but there are other former JCP executives available who could come to work for their former band leader,” Weinswig said.

Weinswig believes the merchandising, planning and allocation and store organization remains in good shape.

Liz Sweney, Penney’s chief merchandising officer and the head merchants in women’s, accessories, men’s and home were all with Penney during Ullman’s previous tenure. But she says the areas of marketing, finance, human resources and operations are lacking talent.

“We further suspect that there could be additional vacancies at lower levels of the organization, which JCP will need to fill,” Weinswig wrote. She says of utmost importance is finding a president or chief operating officer to serve as Ullman’s right hand man.

J.C. Penney Co. (JCP), based in Plano, Texas, is in a cash crunch and is exploring ways to bolster its cash reserves.

Johnson had planned to reinvent the company by getting rid of coupons, bringing in new brands and

From: http://www.dailyfinance.com/2013/04/20/mike-ullman-revive-penneys/

Sales of Martha Stewart Products at J.C. Penney Blocked

By 24/7 Wall St.

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A judge of the New York state appeals court has issued a temporary order that prevents J.C. Penney Co. Inc. (NYSE: JCP) from selling certain home products designed by Martha Stewart Omnimedia Inc. (NYSE: MSO) but sold under J.C. Penney’s “Everyday” brand. J.C. Penney has held the items in its warehouses voluntarily, but based on a ruling from the state Supreme Court last week had planned to get the Everyday-branded items on its shelves by Mother’s Day.

The judge in the case expects to issue a decision tomorrow on the request from Macy’s Inc. (NYSE: M) for a temporary restraining order that would prevent J.C. Penney from selling the disputed items until the court case is decided.

Based on his previous rulings, it seems likely that the judge will deny the temporary restraining order and lift the ban he imposed last night on the sale of the Everyday-branded items. The judge has also chided both parties, telling them that this is a business dispute that should not have been brought to court. From his statements and previous rulings, he is reluctant to restrain J.C. Penney from selling the goods, seeming to prefer to let the Macy’s suit wend its way through the courts and then making J.C. Penney pay up if it turns out that Macy’s suffered injury from the sale of the Martha Stewart items.

J.C. Penney shares are down about 1.8% in the first half-hour of trading this morning, at $14.92 in a 52-week range of $13.55 to $36.89.

Filed under: 24/7 Wall St. Wire, Law, Retail, Services Tagged: JCP, M, MSO

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From: http://www.dailyfinance.com/2013/04/17/sales-of-martha-stewart-products-at-j-c-penney-blocked/

J.C.Penney: Was Ron Johnson's Strategy Wrong?

By Steve Denning J.C. Penney Co. has ousted its CEO, Ron Johnson, the chief executive who reinvented retail at Apple Inc. and who arrived JCPenney just 17 months ago. Mr. Johnson had a bold vision for the JCPenney. On joining the firm, he said, ?In the U.S., the department store has a chance to regain its status as the leader in style, the leader in excitement. It will be a period of true innovation for this company.? …read more

Source: FULL ARTICLE at Forbes Technology

Macy's, J.C. Penney Resume Court Battle Over Martha Stewart

By The Associated Press

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David Handschuh, The (New York) Daily News/AP Martha Stewart testifies in New York State Supreme Court on March 5. Stewart, 71, is at the center of a bitter legal battle between Macy’s and J.C. Penney that resumed Monday.


NEW YORK — Attorneys for J.C Penney and Macy’s were back in court Monday to fight over the Martha Stewart brand after a monthlong mediation period went nowhere.

But after the hearing, the real action began. J.C. Penney Co. (JCP) said late Monday, that the company’s board of directors has ousted CEO Ron Johnson after only 17 months on the job and rehired Johnson’s predecessor, Mike Ullman, 66, who was CEO of the department store chain for seven years until November 2011.

The case, which centers on Macy’s Inc.’s (M) claim that Penney’s deal to sell Martha Stewart branded-merchandise infringes on its own deal with the domestic diva, was likely just one of the reasons Johnson was shown the door. He also had presided over a price strategy that confused customers and drove them away.

The court-ordered mediation followed nearly three weeks of testimony from witnesses including the domestic diva herself, Penney, Johnson and Macy’s CEO Terry Lundgren.

At issue is whether Macy’s has the exclusive rights to sell some Martha Stewart branded products such as cookware, bedding and bath products. Macy’s sued Martha Stewart Living Omnimedia Inc. (MSO), arguing that the company breached its long-standing contract when it signed a deal with Penney in December 2011 to open Martha Stewart mini-shops, planned for this spring. It also sued Penney, contending that it had no regard for the contract and that Johnson had set out to steal the business that Macy’s had worked hard to develop.

The stakes are high for all three companies involved but particularly for Penney, which is counting on a revamped home area to help it rebound from a disastrous year. The company amassed nearly $1 billion in losses and its revenue dropped about 25 percent as the first year of a transformation plan built around a new pricing strategy failed to resonate with shoppers.

Penney was counting on the overhauled home department as part of its bigger plan to turn Penney stores into mini-malls of sorts. It’s in the midst of rolling out 20 shops in its home area featuring products from such designers as Michael Graves and Jonathan Adler. Martha Stewart mini-shops were expected to anchor the home area.

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But those plans are in limbo. Penney had ordered goods like towels and cookware from Martha Stewart Living and were planning to name the goods JCP Everyday, to sidestep a conflict. But Macy’s is trying to stop the retailer from selling goods covered by Macy’s exclusive category even if they don’t carry the Martha …read more

Source: FULL ARTICLE at DailyFinance

J.C. Penney Taps Former CEO Mike Ullman to Revive Its Fortunes

By The Associated Press

jcpenney ceo mike ulllman ron johnson ousted

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Mark Lennihan/AP Mike Ullman was named CEO of J.C. Penney after Ron Johnson was ousted Monday, after a massive restructuring at the retailer backfired.


NEW YORK — J.C. Penney is hoping its former CEO can revive the retailer after a risky turnaround strategy backfired and led to massive losses and steep sales declines.

The company’s board of directors ousted CEO Ron Johnson after only 17 months on the job. The department store chain said late Monday, in a statement, that it has rehired Johnson’s predecessor, Mike Ullman, 66, who was CEO of J.C. Penney Co. (JCP) for seven years until November 2011.

The announcement comes as a growing chorus of critics including a former Penney CEO, Allen Questrom, called for Johnson’s resignation as they lost faith in an aggressive overhaul that included getting rid of most discounts in favor of everyday low prices and bringing in new brands.

The biggest blow came Friday from his strongest supporter, activist investor and board member, Bill Ackman, who had pushed the board in the summer of 2011 to hire Johnson to shake up the dowdy image of the retailer. Ackman, whose company Pershing Square Capital Management, is Penney’s biggest shareholder, reportedly told investors that Penney’s execution “has been something very close to a disaster.”

On Saturday, Ullman received a phone call from Penney’s chairman Thomas Engibous asking him to take back his old job, according to Penney spokeswoman Kate Coultas. The board met Monday and decided to fire Johnson.

Neither Johnson nor Ullman were available for an interview.

Until early last week, some analysts thought the board would give Johnson, a former Apple Inc. (AAPL) and Target Corp. (TGT) executive, until later this year to reverse the sales slide. A key element of Johnson’s strategy was opening new shops featuring hot brands to help turn around the business. They began opening last year and had been faring better than the rest of the store.

“I truly believed that he had until holiday 2013,” said Brian Sozzi, CEO and chief equities strategist Belus Capital Advisers. “Today’s announcement is an indictment of his strategy.”

Under Ullman, the chain brought in some new brands such as beauty company Sephora and exclusive names like MNG by Mango, a European clothing brand, but he didn’t do much to transform the store’s stodgy image or to attract new customers. He’s expected to serve mostly as a stabilizing force, not someone who will make changes that will completely turn the company around.

“What they need is a little bit of stability and essentially adult supervision,” said Craig Johnson, president of Customer Growth Partners, a retail consultancy. “[Ullma]) did nip-and-tuck surgery. But this was a place that needed radical surgery,” Johnson said.

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Sozzi said he …read more

Source: FULL ARTICLE at DailyFinance

J.C. Penney CEO Ron Johnson's Pay Fell 97% in 2012

By The Associated Press

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Thomas Iannaccone/AP J.C. Penney CEO Ron Johnson.


NEW YORK — The CEO of struggling department store J.C. Penney saw his 2012 compensation package plummet nearly 97 percent to about $1.9 million without a sizeable stock award he got last year and no bonuses.

Ron Johnson, 54, received a base salary of $1.5 million, up from $375,000 which he received for a partial year after joining the company in August 2011, according to a Securities and Exchange Commission filing Tuesday. He didn’t receive any stock or option awards, compared with a stock award worth $52.7 million on the date it was granted in 2011. The award was given to Johnson after he was named CEO and made a $50 million personal investment in the company.

He also received $388,587 in other compensation, including contributions to savings plan and perks like personal use of company aircraft, home security systems and information technology services.

The Plano, Texas-based company said Johnson received 44 percent of his target cash compensation — his base salary only. Because the company reported an operating loss for the fiscal year of about $1 billion, no executives received any performance-based bonuses.

In 2011, Johnson succeeded Myron Ullman III, who had been at Penney’s helm since December 2004. Under Johnson, J.C. Penney Co. (JCP) began a turnaround strategy that included getting rid of coupons and most of its sales events to focus on “everyday low prices,” bringing in hipper brands such as Joe Fresh and Betsy Johnson and renovating outdated stores by installing mini-shops to replace undifferentiated racks of clothing.

Johnson, who was the mastermind behind Apple’s chic streamlined stores, has a goal of reinventing J.C. Penney’s business into a hip place to shop in a bid to attract younger, wealthier shoppers. But in the year since the plan has been rolled out, once-loyal customers have strayed from the chain and it hasn’t been able to get enough new shoppers to replace them.

To turn around the business, J.C. Penney has backpedaled a bit. Last month it started sales again and brought back coupons. Still, some investors fear Johnson won’t be able to stem the sales decline in time to finish transforming the stores.

The company’s stock price fell 44 percent in 2012 and since then has fallen further, another 26 percent since the start of the year. It closed Tuesday at $14.55.

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Discussing compensation, J.C. Penney said in a filing that fiscal 2012 was the first year of a “multi-year transformation strategy” for the company.

“The company underwent tremendous change as we began shifting our business model from a promotional department store to a specialty department store,” the company said in the filing. “Fiscal 2012 was tougher than expected and the company’s sales and operating profit declined significantly.”

The Associated Press …read more
Source: FULL ARTICLE at DailyFinance

Registers Cash Out as Retailers Turn to Mobile Payment Devices

By The Associated Press

cash register replaced iphone ipad

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Bebeto Matthews/AP A sales clerk at Barney’s New York uses an iPod Touch to help a customer make a purchase, a trend by stores nationwide, which are moving away from clunky registers to mobile devices.


NEW YORK — Ka-ching! The cash register may be on its final sale.

Stores across the U.S. are ditching the old-fashioned, clunky machines and having salespeople — and even shoppers themselves — ring up sales on smartphones and tablet computers.

Barneys New York, a luxury retailer, this year plans to use iPads or iPod Touch devices for credit and debit card purchases in seven of its nearly two dozen regular-price stores. Urban Outfitters, a teen clothing chain, ordered its last traditional register last fall and plans to go completely mobile one day. And Walmart, the world’s largest retailer, is testing a “Scan & Go” app that lets customers scan their items as they shop.

“The traditional cash register is heading toward obsolescence,” said Danielle Vitale, chief operating officer of Barneys New York.

That the cash register is getting the boot is no surprise. The writing has been on the wall for a long time for the iconic machine, which was created in the late 1800s. The register was essential in nearly every retail location by 1915, but it now seems outdated in a world in which smartphones and tablets increasingly are replacing everything from books to ATMs to cameras.

Stores like smartphones and tablets because they take up less floor space than registers and free up cashiers to help customers instead of being tethered to one spot. They also are cheaper: For instance, Apple Inc.’s iPads with accessories like credit card readers can cost a store $1,500, compared with $4,000 for a register. And Americans increasingly want the same speedy service in physical stores that they get from shopping online.

“Consumers want the retailer to bring the register to them,” said Lori Schafer, executive adviser at SAS Institute Inc., which creates software for major retailers.

Faster is Better

J.C. Penney Co. (JCP), a mid-price department-store chain, said the response by customers has been great since it started rolling out iPod Touch devices late last year in its 1,100 stores. The goal is to have one in the hands of every salesperson by May. The company said that about a quarter of purchases at its stores nationwide now come from an iPod Touch. ks

On a recent Thursday afternoon at a Penney store in the Manhattan borough of New York City, Debbie Guastella, 55, marveled after a saleswoman rang up three shirts she was buying on an iPod Touch.

“I think it’s great,” said Guastella, who lives in Huntington, New York. “The faster the better.”

It’s been a long fall for the cash register, which innovated retail …read more
Source: FULL ARTICLE at DailyFinance

2 State Pension Funds Want More JC Penney Details from Ackman

By Reuters

Ron Johnson, chief executive officer of J.C. Penney Co., exits State Supreme court in New York, U.S., on Friday, March 1, 2013. Johnson took the witness stand to testify in a dispute between his department-store chain and Macy?s Inc. over the right to sell Martha Stewart Living Omnimedia Inc. merchandise. Photographer: Jin Lee/Bloomberg via Getty Images

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Ron Johnson, chief executive officer of J.C. Penney Co.(Jin Lee/Bloomberg via Getty Images)

By Svea Herbst-Bayliss and Katya Wachtel

BOSTON/NEW YORK – Two institutional investors with William Ackman‘s $12 billion hedge fund plan to reach out to the manager to get more information about the firm’s big bet on ailing retailer JC Penney (JCP), whose stock has dropped 21 percent this year.

Officials with two state pension funds that, combined, oversee assets of more than $120 billion told Reuters they want Ackman to give them more information about Pershing Square Capital Management’s portfolio and to say more about the long-range plan for turning around JCPenney’s fashion lines.

The pension officials did not want to be identified because they had not yet set up their meetings with Ackman. The manager, whose fund is sitting on a roughly $500 million paper loss in JCPenney stock, declined to comment.

It’s not uncommon for pension managers and institutional investors to seek a private meeting with hedge fund managers, especially when a big bet or a portfolio is underperforming.

The move by two of Ackman’s investors is an indication that some investors are growing uneasy with Pershing Square‘s stake of 39 million shares in JC Penney, which the hedge fund began amassing in 2010.

“People are reading a lot about Bill Ackman these days and have questions, and while these kind of hedge funds can’t speak to everyone, keeping their very largest clients informed will have benefits,” said Don Steinbrugge, managing partner at investment consulting firm Agecroft Partners LLC, in Richmond, Virginia.

Pershing Square is up 3.6 percent for the year through February, compared with a 2.8 percent gain for the broader $2.6 trillion hedge fund industry.

The pension plan officials said they are also concerned about Ackman’s other very large and public bet -an estimated $1 billion short position in shares of nutritional supplement company Herbalife. Ackman is betting that Herbalife will be exposed as an unsustainable pyramid scheme and the stock will collapse. He currently has a $200 million gain on that bet.

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Billionaire investor Carl Icahn has taken a large stake in Herbalife (HLF) and has engaged in a very public war of words with Ackman over the company.

Meanwhile, at least one prominent hedge fund manager is beginning to line up against Ackman on the short side on JC Penney. Reuters reported last week that York Capital and Morgan Stanley (MS) are shorting the debt of JC Penney, where Ackman sits on the board.

Earlier this week, market speculation that Ackman’s handpicked CEO Ron Johnson might be leaving briefly pushed JC Penney shares up 5 percent on Tuesday.

But not all investors are pushing for Ackman to talk more about JC Penney. Given the fund’s strong track record over the years and current gains, several investors said they are very happy with Ackman and his team.<br …read more
Source: FULL ARTICLE at DailyFinance

Top Analyst Upgrades and Downgrades (A, BBY, BFAM, DF, ICE, JCP, MA, QCOM, CRM, SKX, VVUS)

By 24/7 Wall St.

Bull and Bear

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These are some of this Wednesday’s top analyst upgrades, downgrades and initiations seen from Wall St. research calls.

Agilent Technologies Inc. (NYSE: A) started as Outperform at Leerink Swann.

Best Buy Co. Inc. (NYSE: BBY) raised to Buy at Jefferies.

Bright Horizons Family Solutions LLC (NYSE: BFAM) was started in new coverage as follows: Buy at BofA/Merrill Lynch, Overweight at Barclays, Outperform at Credit Suisse, Buy at Stifel Nicolaus and Neutral at Goldman Sachs.

Dean Foods Co. (NYSE: DF) raised to Outperform at Credit Suisse.

IntercontinentalExchange Inc. (NYSE: ICE) raised to Outperform at KBW.

J.C. Penney Co. (NYSE: JCP) was cut to Neutral from Buy at Citigroup and was cut to Perform from outperform at Oppenheimer.

MasterCard Inc. (NYSE: MA) cut to Hold at Argus.

Qualcomm Inc. (NASDAQ: QCOM) was maintained as Buy but was removed from the prized Conviction Buy List at Goldman Sachs.

Salesforce.com Inc. (NYSE: CRM) named Bear of the Day, while all-time highs are nice but outlook may be lower at Zacks Investment Research.

Skechers USA Inc. (NYSE: SKX) named Bull of the Day as new styles and global reach are returning it to profitability at Zacks Investment Research.

VIVUS Inc. (NASDAQ: VVUS) started as Overweight at Piper Jaffray.

Here are 11 stocks which analysts expect to rise 50% to 100% (or more) over the next year.

Also, here is how only seven of the 30 DJIA stocks will take the market to 15,000.

Oppenheimer listed two transportation stocks that will keep confirming Dow Theory with transports leading the way.

Filed under: 24/7 Wall St. Wire, Analyst Calls Tagged: A, BBY, BFAM, CRM, DF, ICE, JCP, MA, QCOM, SKX, VVUS

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Source: FULL ARTICLE at DailyFinance

Media Digest (3/6/2013) Reuters, WSJ, NYT, FT, Bloomberg

By 24/7 Wall St.


Apple Inc. (NASDAQ: AAPL) and Beats Electronics discuss a content partnership. (Reuters)

The European Union will fine Microsoft Corp. (NASDAQ: MSFT) for violating agreements about use of its browser. (Reuters)

Google Inc. (NASDAQ: GOOG) begins to test a same-day delivery system for retailers’ products that have been bought online. (Reuters)

Five stocks that have accounted for much of the increase in the Dow Jones Industrial Average since it hit bottom in 2009 are International Business Machines Corp. (NYSE: IBM), Caterpillar Inc. (NYSE: CAT), 3M Co. (NYSE: MMM), Chevron Corp. (NYSE: CVX) and United Technologies Corp. (NYSE: UTX). (WSJ)

The BNSF Railway unit of Berkshire Hathaway Inc. (NYSE: BRK-A) will test the use of natural gas to run trains that now use diesel. (WSJ)

J.C. Penney Co. Inc. (NYSE: JPC) board members may replace its chief executive or sell the company if results do not improve this year. (WSJ)

Short sales greatly help the housing market by replacing foreclosures as a way to sell homes. (WSJ)

The Federal Reserve will not allow banks to use stress test rules that they have pushed for over the current ones. (WSJ)

China’s Tencent, a competitor of Twitter, will move into the United States. (WSJ)

China attacks Google for the dominance of its Android system in the smartphone market in the People’s Republic. (WSJ)

Microsoft discounts Windows 8 and Office in an attempt to increase sales. (WSJ)

State college education tuition surges as access to public money drops due to hard financial times for state governments. (WSJ)

Companies with employees who work from home at least one day a week have had increases in productivity and lower costs. (WSJ)

News Corp. (NASDAQ: NWSA) will launch a sports network on Fox. (WSJ)

Proxy advisory firm ISS urges investors not to vote for Hewlett-Packard Co. (NYSE: HPQ) Chairman Ray Lane and several other board members. (WSJ)

Fiat presses plans to buy all of Chrysler. (WSJ)

Some investors will fight the merger of MetroPCS Communications Inc. (NYSE: PCS) and T-Mobile. (WSJ)

The Institute for Supply Management reports that business expansion in the United States has been strong. (NYT)

Samsung makes a $100 million investment in Sharp. (FT)

Toyota Motor Corp. (NYSE: TM) discounts prices of its popular Camry because sales have fallen. (Bloomberg)

Filed under: 24/7 Wall St. Wire, Press Digest Tagged: AAPL, BRK-A, CAT, CVX, GOOG, HPQ, IBM, JCP, MMM, MSFT, NWSA, PCS, TM, UTX

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Source: FULL ARTICLE at DailyFinance

Who Wants to Buy J.C. Penney? No One

By 24/7 Wall St.


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J.C. Penney Co. Inc.’s (NYSE: JCP) board has a problem. If it wants to sell the company, in lieu of kicking out Ron Johnson as CEO, as the Wall Street Journal has reported, it may find that there is no buyer. What retailer wants a company that has lost 20% of its sales in the past year and has 1,100 aging stores? Some observers think that the J.C. Penney real estate holdings have a hidden worth. The drop in the firm’s stock price would indicate otherwise.

It might be argued that J.C. Penney is a bargain. Its market share is $3.3 billion. Its annual sales run rate is almost $13 billion. It lost “only” $985 million last year, but the rate of those losses has accelerated.

The most obvious reason that J.C. Penney could be attractive to another large retailer is that many of its 1,100 stores have to be losing money. If those stores are shuttered, losses should abate. But the number of stores is a problem secondary to the merchandising and marketing plans put into effect by CEO Ron Johnson. The failure of those may be hard, if not impossible, to reverse.

No successful retailer will buy J.C. Penney. Better-run companies like Macy’s Inc. (NYSE: M)and Nordstrom Inc. (NYSE: JWN) have settled on optimal store locations and store numbers. None of the investors in these public corporations want to see management take a long shot at J.C. Penney.

The only possible buyer of J.C. Penney is Sears Holdings Corp. (NASDAQ: SHLD), which was built by an ill-advised combination of the Sears and Kmart brands. However, controlling shareholder and CEO Eddie Lampert has continued his commitment to middle-tier national retailing. It would be monumentally difficult to put J.C. Penney together with Sears and Kmart. Likely such a combination would involve the closure of hundreds of stores, as well as logistical nightmares. But Lampert has the guts of a high-stakes gambler. The Sears Holdings experiment has been a failure. Another retail combination is a long shot, but it may be his only way out of a severe dilemma.

Even Lampert may believe J.C. Penney is too much of a risk, though. That leaves the J.C. Penney board without options.

Filed under: 24/7 Wall St. Wire, Mergers and Buy Outs, Retail Tagged: JPC, JWM, M, SHLD

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Source: FULL ARTICLE at DailyFinance

Martha Stewart Denies Wrongdoing in J.C. Penney Deal

By The Associated Press

Martha Stewart, founder of Martha Stewart Living Omnimedia Inc., testifies at State Supreme court in New York, U.S., on Tuesday, March 5, 2013. Stewart took the stand in a Manhattan courtroom today as Macy's Inc. continues its fight to persuade a New York state judge to block parts of her company's agreement with J.C. Penney Co. Photographer: David Handschuh/Pool via Bloomberg

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NEW YORK (AP) – Home diva Martha Stewart testified in court on Tuesday that she did nothing wrong when she signed an agreement to open up shops within most of J.C. Penney’s (JCP) stores across the country.

Stewart testified in New York State Supreme Court as part of a legal battle over whether the company that she founded breached its contract to sell some items exclusively at Macy’s (M) when she inked the deal with Penney in December 2011.

Stewart, who founded Martha Stewart Living Omnimedia Inc. (MSO), during three hours of testimony, denied Macy’s allegations that she did anything unethical in brokering the deal with Penney.

She said that she was only looking to expand and offer new opportunities for shoppers. In fact, she said that it was Macy’s that didn’t uphold its end of an agreement for trying to maximize the potential of her business, she said.

“I think Macy’s has been a good partner,” Stewart said. “It just boggles my mind that we’re here sitting in front of you, judge.”

The trial, which is in its third week, has unveiled some of the drama that has taken place behind-the-scenes between Stewart and the CEOs of Macy’s Inc. and J.C. Penney Co.

Macy’s attorneys have portrayed Stewart as someone who turned her back on a good friend, Macy’s CEO Terry Lundgren, to broker a deal with a rival company. During testimony earlier in the trial, Lundgren said that he hung up on Stewart after she told him about the deal she’d reached with Penney, and hasn’t spoken to her since.

“I was quite taken back by his response and when he hung up on me I was quite flabbergasted,” Stewart said on Tuesday.

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Stewart’s testimony comes as the company she founded continues to struggle. Martha Stewart Living just finished its fifth straight year of losses. The company has also had steep sales declines.

Martha Stewart Living has been trying to bolster its merchandising business, which represents 30 percent of the company’s annual revenue, to offset declines in its broadcast and publishing divisions as people continue to shift toward the Web and mobile apps to get their recipes and food tips.

As the housing recovery gains momentum and consumers look to plow money into their home, the biggest opportunities for Martha Stewart Living are in the home category. So, the stakes are high.

During her testimony on Tuesday, Stewart said she always wanted to open big shops at Macy’s, but the retailer never embraced that concept. Instead, she noted the merchandise is just “here and there.”

That’s why she said that a proposal from Penney’s CEO Ron Johnson to create shops filled with all sorts of home merchandise was appealing.

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J.C. Penney Stock Down on Reported Share Sale

By 24/7 Wall St.


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Shares of J.C. Penney Co. Inc. (NYSE: JCP) were down sharply in premarket trading this morning following a report that commercial and retail real-estate REIT Vornado Realty Trust (NYSE: VNO) has sold nearly half its reported 10.7% stake in the struggling retailer. Bloomberg News cites “two people familiar with the offering … who asked not to be identified citing lack of authorization to speak publicly.”

According to the report, Vornado sold a block of 10 million shares through Deutsche Bank. The real estate firm said last week that it took a loss of nearly $225 million last year on its investment in J.C. Penney. Vornado’s chairman, Steven Roth, is a member of J.C. Penney’s board of directors.

J.C. Penney shares have taken a horrific beating in the past year or so, down 44% in 2012 and another 15% so far in 2013. The company’s sales have fallen through the floor as CEO Ron Johnson discontinued J.C. Penney’s long-time strategy of weekly sales and discounts in favor of raising the store’s image in an effort to attract more customers. To be fair, Johnson took over a leaky boat, but his leadership has made the leaks worse not better.

Shares are down about 4.4% at $16.00 in premarket trading this morning, in a 52-week range of $15.69 to $39.73.

Filed under: 24/7 Wall St. Wire, REIT, Retail Tagged: JCP, VNO

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21 Reasons No One May Be Selling J.C. Penney Stock

By 24/7 Wall St.


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CNBC reported a rumor that a block of J.C. Penney Co. Inc. (NYSE: JPC) stock was for sale, with the transaction represented by Deutsche Bank. The Wall Street Journal claims the seller is Vornado Realty Trust. Its chief, Steve Roth, sits on the J.C. Penney board. But the facts have not been confirmed and may be wrong for several reasons.

The first set of potential mistakes centers around which shareholder may be the seller. Apparently seven shareholders have enough stock to dump the 10 million shares in question. These include Vornado, Pershing Square — which is J.C. Penney’s largest shareholder and a firm controlled by J.C. Penney board member Bill Ackman — and Dodge & Cox. Under any circumstance, it would be odd that a board member, in this case Roth, would so publicly break with the company and continue to be a board member.

What also may or may not be true is the price at which the shares are being sold. Media reports put that amount at $16.40 to $16.60 a share. That number could be off for a number of reasons, not the least of which that J.C. Penney shares dropped below $16 after hours yesterday. If Vornado, or any other shareholder, wants to dump a large block, it will not be at $16.60

Finally, Deutsche Bank may not represent the seller of the shares. Journalists covering the rumor may have missed the fact that several investment banks have may have joined in an effort to peddle the shares. Or, if the shares are not for sale, no investment bank is involved at all.

The J.C. Penney rumor is similar to others that race around Wall St. fueled by the media. News outlets want to be early to market with “news” which, in the haste, may turn out to be no story at all. Perhaps some portion of the story is correct, but most of the facts are not.

Filed under: 24/7 Wall St. Wire, Corporate Governance, Rumors Tagged: JCP

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Retail Sales on Track for Lower Growth

By 24/7 Wall St.


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After three consecutive years of 4%+ same-store sales growth in the month of February, the outlook for the month in 2013 calls for growth of 2.7%, primarily on a forecast of weaker sales at apparel and teen specialty retail stores. According to research firm Retail Metrics, projected weakness at both J.C. Penney Co. Inc. (NYSE: JCP) and Sears Holding Corp. (NASDAQ: SHLD) have led to projected decline in same-store sales of 0.1% at department stores.

The largest gains are forecast at discount stores such as Big Lots Inc. (NYSE: BIG), Costco Wholesale Corp. (NASDAQ: COST), PriceSmart Inc. (NASDAQ: PSMT) and Family Dollar Stores Inc. (NYSE: FDO).

The research firm attributes the lower comparable store sales to delays in getting refunds to taxpayers, the impact of higher payroll taxes on income, higher gasoline prices in February, and cooler weather which delayed the start of sales of spring clothing.

Retail same-store sales figures are due to be released later this week.

Filed under: 24/7 Wall St. Wire, Apparel, Retail Tagged: BIG, COST, FDO, JCP, PSMT, SHLD

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Penney's shares plunge after 4Q massive loss

Shares of J.C. Penney Co. plunged a day after the department-store chain reported massive losses and a nearly 30 percent drop in revenue in its fiscal fourth-quarter period.

The results, which were much worse than Wall Street expected, cap off a full year of steep losses and sales drops since CEO Ron Johnson launched a turnaround plan that included getting rid of most the 600 or so discounts the chain used to offer each year in in favor of everyday low prices.

Penney reported on Wednesday after the markets closed that it widened its quarterly loss to $552 million, or $2.51 per share. Revenue fell 24.8 percent to $12.98 billion.

On Thursday, its shares fell 19 percent, or $3.98, to $17.18. Shares have dropped 60 percent since early last year.

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Source: FULL ARTICLE at Fox US News

Sears Shares Rise on Solid Results

By 24/7 Wall St.


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Sears Holdings Corp. (NASDAQ: SHLD) reported fourth-quarter and fiscal year 2012 results before markets opened this morning.

The department store operator reported quarterly adjusted diluted earnings per share (EPS) of $1.12 on revenues of $12.3 billion. In the same period a year ago, Sears reported EPS of $0.54 on revenue of $12.5 billion. This morning’s results also compare to the Thomson Reuters consensus estimates for EPS of $0.98 and $11.77 billion in revenue.

On a GAAP basis, the company posted a quarterly net loss of $4.61 per share, compared with a net loss of $22.63 per share in the fourth quarter of 2011.

For the full year, Sears posted an adjusted EPS loss of $2.03 on revenues of $39.85 billion compared with a full-year 2011 loss of $4.52 per share. On a GAAP basis, the 2012 EPS loss totaled $8.78, compared with a loss of $29.40 on revenues of $41.57 billion in 2011. The consensus 2012 estimate called for a loss of $2.28 on revenues of $39.66 billion.

The company’s chairman and CEO, Eddie Lampert, wrote a letter to shareholders in which he denies that Sears’ problems come from underinvesting in the company’s stores. He notes:

In reality, and as I have discussed in prior shareholder letters, the progression of the Internet and mobile technology is fundamentally reshaping many industries, with retail being one of the largest. Increased price transparency, better customer-level information and analytics, faster supply chains and the advent of social networking and social media are all contributing to making running a large retail organization more complex.

There has been a significant amount of turnover at the highest levels of retail leadership and it only seems to be increasing. Changes at the CEO or President level of Safeway, Toys “R” Us, Staples, JCPenney, Best Buy and others are signs that the talent needed to transform companies in the retail industry today and the persistence required to see transformations through are not easy to come by. I believe that we are seeing an enormous shift in the type of talent that will be running retail enterprises in the future, similar to the shift that Google brought to the advertising business and that quants brought to financial services.

Whether or not Lampert counts himself as one of the new breed of retail CEOs isn’t clear, but pointing to J.C. Penney Co. Inc. (NYSE: JCP) and Best Buy Co. Inc. (NYSE: BBY) as examples of new talent with different skills probably is not encouraging to investors. J.C. Penney last night reported an adjusted EPS loss of $1.95 for its fourth quarter, and the company is setting plans to return to its prior practice of scheduling sales.

Sears did not offer guidance, nor is there a consensus EPS estimate. A consensus revenue estimate is $8.9 billion. For the full year, the consensus estimate calls for an EPS loss of $3.14 on revenues of $36.03 billion.

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Martha Stewart Battle Leads Macy’s CEO, J.C. Penney CEO To Testify

By The Huffington Post News Editors

NEW YORK — Macy’s Chairman, President and CEO Terry Lundgren is scheduled to testify in New York State Supreme Court on Monday in a trial that pits the department store chain against rival J.C. Penney Co. over a partnership with home diva Martha Stewart.

The trial focuses on whether Macy’s has the exclusive right to sell Martha Stewart-branded products in such categories as cookware, bedding and bath.

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Source: FULL ARTICLE at Huffington Post

Amazon and Apple Crush Competition in New Mobile Survey

By 24/7 Wall St.

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Amazon.com Inc. (NASDAQ: AMZN) and Apple Inc. (NASDAQ: AAPL) place so high on most customer satisfaction surveys that the repetition has made the conclusions commonplace. Unfortunately for several financially battered retailers, their stumbling has not been helped by their satisfaction grades. The trends, both good and bad, have extended to mobile e-commerce.

Research firm Foresee issued its “ForeSee Mobile Satisfaction Index: Holiday Retail Edition.” The results are not terribly different from the Foresee e-commerce data for the same period. Retailers who do well online also do well with mobile activity. Of the 25 companies included:

Amazon tops the list at 85, with Apple (83), and QVC (83) close behind. Rounding out the top five are NewEgg (80) and Victoria’s Secret (80).

Almost no one has heard of PC hardware and parts company NewEgg. The balance of the companies are well known. Amazon had better be at the top of the list, for its own sake, since it has no physical stores to speak of. QVC does not either, because its other medium for sales is television. Apple and Victoria’s Secret must just try harder, although the popularity of their products may get mobile e-commerce buyers to have positive views of the merchandise under any circumstances.

Retailers that are in steep decline, in general, do not do well in the Foresee results. The Sears division of Sears Holdings Corp. (NASDAQ: SHLD) rates just one spot from the bottom. Also-ran discounter Overstock.com Inc. (NASDAQ: OSTK) also does poorly, and troubled online retailer Gilt does very badly as well.

In the range of merely mediocre are Wal-Mart Stores Inc. (NYSE: WMT) and Target Corp. (NYSE: TGT), each of which have huge traffic and are among the top 50 most visited sites in the United States, according to Comscore. Their volumes of business are such that mid-tier performance in the Foresee survey probably does not hurt them much. Also in the middle of the rankings are Best Buy Co. Inc. (NYSE: BBY) and J.C. Penney Co. Inc. (NYSE: JCP), each of which needs to do better in e-commerce and in physical store activity to keep away from trends that already have caused questions about their viability.

On the whole, the companies that did poorly in the Foresee research cannot afford to.

Methodology: In a survey of more than 6,200 consumers collected during the peak holiday shopping season between Thanksgiving and Christmas, the retail juggernaut scored highest among 25 of the top mobile commerce companies. The report shows that consumer satisfaction with the mobile retail experience is improving, as the Index climbs two points since last holiday season to 78 on a 100-point scale.


Filed under: 24/7 Wall St. Wire, Internet, Retail Tagged: AAPL, AMZN, BBY, JCP, OSTK, SHLD, TGT, WMT

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