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For more than a year, J.C. Penney's (JCP) stock has been dropping like a stone, while other retail stocks have been soaring. The problem? A radical pricing strategy that replaced conventional sales promotions, including coupons, with everyday low price - shoppers didn't go for it, legal woes, and a leadership shake-up that have taken their toll on the company's performance (see table).


Forward PE

Qtrly Revenue Growth (yoy)

Qtrly Earnings Growth (yoy)

Operating Margins

J.C. Penney




-3.95 %












On Friday, J.C Penney's stock soared. The catalysts? A vote of confidence by George Soros. The legendary financier took a "passive" 7.8 stake in the company; a financial arrangement with Goldman Sachs (GS) that didn't include any equity stake by the financial firm.

These developments come shortly after the company changed strategy, returning to the old sales promotions to be implemented by the appointment of J.C. Penney's old CEO replacing Ron Johnson. Will this new policy bring shoppers and investors back? What should investors do?






Obviously, the price change that eliminated sales through coupons for everyday low price was a strategic mistake that, in our opinion, that comes from a misunderstanding by its leadership of the difference between J.C. Penney and Apple stores. Now the company comes to correct this mistake. Will it work?

The answer is yes. The strategy works for other retailers and did work before for J.C. Penney. That's why the stock deserves another look for long-term investors, especially at these price levels.

Source: J.C. Penney's Problems Can Be Fixed