J.C. Penney to Go Shopping For Real Estate
By George Anderson
With $2.5 billion to play around with after it pays down $500 million in debt, J.C. Penney has plans to go shopping for real estate, reports MarketWatch.com.
In a conference call to announce the company’s financial results, Penney’s chief financial officer Bob Cavanaugh said, “We have got enough resources there to be very aggressive
should properties come on to the market that make financial and economic sense in terms of their pricing.”
Separately, in a released statement concerning the company’s operating results, Penney chairman and chief executive Mike Ullman said, “2004 was a breakout year for JCPenney as
a result of the organization’s focus on the execution of our business plan. The company has strong momentum as we pursue compelling merchandise initiatives that respond to the
needs and wants of our customer. Based on our improved operating performance, completion of the sale of Eckerd and the ongoing capital repositioning program, the company’s financial
position has improved significantly. As we enter 2005, the company has increased financial flexibility to support the long range plan that we are developing and places us in a
good position to implement additional capital structure repositioning actions.”
Moderator’s Comment: Considering its current financial position and the competitive environment, where would you take J.C. Penney if you were in Mike
Ullman’s place? –
George Anderson – Moderator
I agree. They might check in Troy, MI and Chicago, IL for some real estate at bargain prices.
To this casual observer, it looks like Penney has been doing the right things. They haven’t forgotten who they were but seem to have improved in their presentation and marketing. It’s a horse race between them and Kohl’s in this part of the country for good quality items at very competitive prices. Penney and Kohl’s both have a better reputation than Wal-Mart for clothing fashions and have seemed to really hurt Sears the most.
Penney could pick up some of the Kmart/Sears locations at a very good price and turn them into profitable stores, especially where Kmart/Sears has locations that are too close to each other.
With May and Federated combining to be a $30B powerhouse, I suspect JCP may be looking for ways top extend their brand. Kohl’s perhaps?
I believe there is an untapped market in communities that have banks, a post office, major drug stores and super markets, but no department store. A department store, such as J C Penney could have exclusivity for years, especially if they kept the size of their selection current with demand.