Turnaround of JC Penny

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Case Details:

Case Code : BSTR160
Case Length : 15 Pages
Period : 1990 - 2005
Organization : J C PENNEY
Pub Date : 2005
Teaching Note : Available
Countries : USA
Industry : Retailing

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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The Downfall

In the late 1990s, even when the organized retail industry in the US was going in for centralized merchandising, JCP continued to leave merchandising decisions in the hands of local store managers. It was the store managers who decided what and how much to buy...

The Turnaround

In 1999, Vanessa Castagna (Castagna), who had merchandising experiences at Target, TJX Cos. and Wal-Mart, joined as COO in charge of stores, merchandise, and catalog. Castagna, the first outsider to ever serve JCP at the level of COO, introduced a number of operational changes in the company. "When I joined JCPenney, I assumed that its store managers would be generally competent and up to speed.

This did not turn out to be the case. When I joined the company, I also assumed that the correct systems and procedures would be in place. This did not turn out to be the case. Finally, when I joined the company, I assumed that senior management would at least be on top of things.

Bouncing Back

The restructuring exercise carried out at JCP showed improved results for the company. JCP's stock value, which went northwards, indicated that that the bourses had been supportive of the restructuring exercise through the years (Refer Exhibit III for stock movements of JCP between the period 2000-05)...

Outlook

Earlier Sears, Roebuck & Co. (Sears) was considered as JCP's main competitor, but with the Sears-Kmart merger coming into effect, the competitive position changed and Kohl's took Sears' position as JCP's major competitor . Industry observers have contrary opinions on the effect of the merger between Kmart and Sears on JCP...

Exhibits

Exhibit I(a): Geographical Spread of JCP Outlets in US
Exhibit I(b):J C Penney Stores in US and Brazil in 2003
Exhibit II: Stock Price Movement and Volume Turnover for J C Penney during March 1995 and March 2005 at New York Stock Exchange
Exhibit III: Stock Price Movement for J C Penney during March 2000 and March 2005 at New York Stock Exchange
Exhibit IV: Stock Price Movement and Volume Turnover for J C Penney between February 2004 and February 2005 at New York Stock Exchange

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