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Sorry, JCPenney: Investors Ain’t Got Time for That

JCPenney (JCP) is down 45% in the past 12 months thanks to a rather horrific plan to reinvent the company. After eliminating a plethora of coupons and discounts and experimenting with a “stores-within-a-store” model, sales imploded.

It was so bad that the 16% revenue drop reported in May was actually an improvement over last year.

But even if you think wonderboy Ron Johnson — the former retail chief for Apple (AAPL) who was recently canned from the top spot at JCPenney — was a wreck, it’s hard to get enthusiastic about the new CEO, or the new plan for JCP.

Or should I say, the old plan for JCP.

Myron Ullman, who previously ran the company into a stale and stagnant corner of department-store retail, has been tapped to turn back the clock. But the problem is that Ullman’s reign was far from awe-inspiring — and his lack of agility and foresight in the face of e-commerce margin-squeezers like (AMZN) was part of the reason Johnson was hired in the first place.

Ullman ran JCPenney from 2004 to 2011, when Ron Johnson took over. Under his tenure, the stock went nowhere — from the high $30s when he was hired to the high $30s when he left. Meanwhile, Nordstrom (JWN) more than doubled in that same period, as did Dillards (DDS). Even lowly Sears (SHLD) tacked on more than 50%.

Sales were in a slow tailspin, profits were lackluster … not a track record to get thrilled about.

Of course, flat is better than bleeding red. But JCP clearly does not just need a stable hand at the helm. It needs someone to remedy the damage done by Ron Johnson and also address the original problem of stagnant sales that prompted Ronnie’s hire to begin with.

Ullman is not that man. And he admits as much.

“I wouldn’t recommend that we go back to the way J.C. Penney was when I left. Things change,” Ullman said, according to The Wall Street Journal.

He quickly added, “There’s no reason to try and alienate customers who want to try and shop at J.C. Penney.” And that’s true.

But again, the problem here is not simply failing to turn off existing customers. It’s finding new ones and growing the brand — something Ullman and Penney have been miserable at.

Penney has secured a new $1.75 billion loan and brought back brands such as St. John’s Bay. There might be some incremental gains here since St. John’s Bay admittedly brought in $1 billion in sales annually before Ron Johnson dropped it for fashionable replacement brands.

But reverting to stale, old ways is not a path to growth. And it’s certainly not a plan that can save a company on the brink.

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Jeff Reeves is the editor of and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.

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