
JC Penney and Best Buy are turnarounds in the making, but that’s where the comparisons stop. Each is attacking its problems differently. And when both retailers release earnings this week following a promotion-prone holiday season, it won’t be just investors scrutinizing their progress. The marketing and ad worlds will also be watching to see who is closer to succeeding.
If the stock prices foreshadow anything, Best Buy is leading. The Minneapolis-based chain, with revenue of $44 billion, has already achieved $550 million in cost savings since its turnaround strategy was unveiled in November 2012. Called “Renew Blue,” it focuses on rejuvenating areas like online shopping and customer service. The retailer, however, did stumble some over the holidays: Even as its market share grew 2%, same-store sales fell 0.9% in November and December due to aggressive price promotions. Still, trading at about $24, the stock has more than doubled from early last year.
Since April 2013, when JC Penney embarked on a turnaround of its turnaround — former CEO Ron Johnson billed his efforts as a turnaround too, of course — it has streamlined by announcing plans to close 33 stores and reduce headcount by 2,000. But its main comeback strategy entails returning to the discount price roots abandoned under Mr. Johnson, who favored a failed everyday low price strategy. Since Mr. Johnson was replaced by Mike Ullman last April, the chain has reinstated deals and popular house brands, but it’s still struggling to increase consumer traffic and conversion. Its shares, at nearly $6, have lost about three-quarters of their value since Jan. 1, 2013.
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