Questions, questions...there is, I firmly believe, a solution to this almost cancerous dilemma that JCP finds itself in, but it will not be easy. It goes without saying that any solution forwarded by their illustrious management team will need to address one key component : who the hell is shopping at J.C. Penney? Is it the affluent, the even more embattled "1%-ers?" Ehh...probably not. Is it the upper middle-class? Williams-Sonoma and its pseudo-swanky ilk are likely to compete for major chunks of market share. Will the target audience be the lower class? This seems like the most probable sector, but the near monopoly that Wal-Mart has in appealing to this broad category would make any concerted attempt to conquer this stronghold a bloody mistake.
So by default, this leaves us with the "middle middle-class," the families that live paycheck-to-paycheck but on a far higher threshold than the lower class. They are the ones that squeak by on a stripped down BMW 3-series sedan rather than make comfortable payments on a fully loaded Toyota Camry. It is awfully hard to appeal to this segment since they are willing to stretch for the reputation of branding : will JCP's fresh new look reverse years of ridicule as a poor man's Macy's?
Sure, the sales numbers are up but was it worth it? The swing in momentum today had a lot to do with the technicalities of trading psychology more so than actual fundamentals. We have to remember that this company is deeply in debt and has continued to add on to this enormous, overhanging liability. Any increase in margin has to be substantial enough to overcome their financing charges, which in my opinion is deathly large : a cursory look at the cash-flow statement reveals all I could ever care to express on that topic.
JCP a potential reversal? Don't hold your breath.