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Steven Kiel
Steven Kiel
Articles (136)  | Author's Website |

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June 05, 2012 | About:

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About the author:

Steven Kiel
Steven Kiel is the president and chief investment officer for Arquitos Capital Management, a Virginia-based investment management firm. He is a graduate of George Mason School of Law and a captain in the Army Reserves. He manages two spoke funds, The Freedom Fund, a value-oriented portfolio, and The Hayek Fund, a portfolio dedicated to free market principles. He can be contacted at steven.kiel@arquitos.com or through the firm's website at www.arquitos.com.

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Rating: 4.4/5 (14 votes)

Comments

radioheadok311
Radioheadok311 - 5 years ago    Report SPAM
One of the questions I was kicking around with fellow classmates is "why did JCP roll out the new price and transformation before remodeling the majority of its stores?" I think this is an interesting question, some people were expecting a much different experience due to the ads and received the same store layout as before. I think that is a problem, hopefully short-lived, but a problem nonetheless.

Another question I have is: Is JCP trying to shift the demographics it caters to? i.e. shifting away from bargain hunters to more fashion-forward consumers? If so, then we shouldn't be too surprised by the most recent results.
slkiel
Slkiel - 5 years ago    Report SPAM
They rolled out the new pricing system first for two reasons: That allowed them to begin cutting expenses immediately (It turns out it costs hundreds of millions of dollars to constantly be putting on sales), and it allowed them to immediately begin reaching out to better brands that didn't want to be associated with constant discounts. That has also paid dividends as many of these new brands are launching before the back to school season and later this fall.

To you second question, I think you're right. Slightly more well-heeled shoppers means a bit more spending per customer. That increases the sales per square foot, which is the key. The better brands will attract the more affluent shopper. That will take time to reset, but there has been anecdotal evidence that these types of customers are beginning to notice.
radioheadok311
Radioheadok311 - 5 years ago    Report SPAM
Your first point is interesting. Can we view this is a two-pronged approach, then?

1) Cut bloated cost structure (corporate inefficiency and the aforementioned cost of re-pricing) to staunch bleeding from 6-12 months of horrible SSS.

2) Bring in the new brands and increase sales per sq. ft once newly targeted consumer takes notice; likely a 1-2 year process

Result = op. leverage and increasing SSS in years 2-3

Likely going to require some intestinal fortitude to deal with the hiccups, but seems like a fantastic opportunity for the long-term investor (if there are any left in existence). The alternative for JCP was a slow-to-rapid death, so I suppose shareholders, and employees should be excited.
slkiel
Slkiel - 5 years ago    Report SPAM
Yep, I agree on the intestinal fortitude as well. The new team and Ackman appear to have it.
Cogitator99
Cogitator99 - 4 years ago    Report SPAM
Steven, what are your thoughts on the latest Q?

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