OFF THE WALL: In stores and in stocks, JCPenney and Macy’s duke it out

By Rene Pastor

Let’s face it. Nothing says American Christmas more than a tinsel-wrapped present from JCPenney or a gift card from Macy’s.

Despite the Pope’s declaration of war against the commercialism of Christmas, holiday shopping has become the spectator sport as shopper versus shopper trample all over each other over a 50″ HDTV. The winner goes home with the TV, some bruises and a police report to complete his day.

In the stock market, it’s probably not fair to lump Macy’s and JCPenney together. While both are publicly listed, their performance has been night and day.

Macy’s is trading above $52 per share and has been praised for its adroit positioning in the brick-and-mortar retail sector. JCPenney, on the other hand, had to dismiss its CEO, replace him with the former chief and is slowly trying to get back on track. Its share price is hovering under $10.

JCPenney has 1,100 stores across the country, while Macy’s has 840 stores which include Bloomingdale’s locations. Martha Stewart figures prominently in their shared history as Macy’s brought a breach-of-contract lawsuit against JCP in 2012 over Stewart-branded linens, cookware and other merchandise. Macy’s says Stewart signed an exclusivity contract with them, a claim that is strongly disputed by JCP, which insists no such language exists in the contract. A decision is being awaited, which may have a bearing on the stocks of the rival retailers.

I remember going to the JCPenney in Manhattan Mall on Herald Square to look for possible gifts for assorted kin and friends. Nowadays, I go through JCPenney mainly as a shortcut to and from Penn Station.

Macy’s is not too far off. It’s almost back to back with JCP on 34th Street. It’s where I wait for the Q32 or M4 bus that takes me to Queens. I go to these stores not to shop, in the same way that scores of Americans have migrated from store to online shopping.

If I can buy a gift with the click of a mouse, why would I go through the aggravation of finding a parking slot half a mile away from the mall, fight through traffic and crowds.
JCPenney now has while Macy’s has, a tacit recognition that online retail is becoming more important as the years go by. Almost every Internet-based store has a return policy so that is no longer an issue.

So even if Macy’s will be doing well this Christmas and JC Penney is on the mend, I cannot convince myself that their business model is going to perform well a few years down the road, much less 10.

I know there will still be people who would want to go to a store and browse. But a lot of stuff is moving online and the sheer number of things available on the net is exploding.

It is a prime reason why ad dollars are moving online whether it is on Facebook, Netflix or Groupon. The future of retail is on the Internet.

‘Off the Wall’ is a weekly column on the stock market. The comments expressed here are the author’s personal views and are not meant to recommend the buying or selling of stocks.

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