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

Before you go, we thought you'd like these...
Before you go close icon

JCP-logoJ.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: featured, JPC, JWM, M, SHLD
Read Full Story

Markets

S&P 500 2,369.85 8.72 0.37%
DJIA 20,745.80 86.48 0.42%
NASDAQ 5,914.25 16.70 0.28%
DAX 12,247.27 44.27 0.36%
NIKKEI 225 19,063.22 -154.26 -0.80%
HANG SENG 24,301.09 -90.96 -0.37%
USD (per EUR) 1.07 0.00 -0.24%
USD (per CHF) 1.00 0.00 -0.01%
JPY (per USD) 111.33 0.18 0.16%
GBP (per USD) 1.25 0.01 0.42%

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners

Man Built This Contraption In His Backyard - And Even He Was Surprised How Well It Worked Man Built This Contraption In His Backyard - And Even He Was Surprised How Well It Worked
This Elephant Was Separated From Her Mother As A Baby - But She's About To Get A Huge This Elephant Was Separated From Her Mother As A Baby - But She's About To Get A Huge
19 of the Creepiest, Most Inexplicable Things People Ever Experienced 19 of the Creepiest, Most Inexplicable Things People Ever Experienced