J.C. Penney: Can It Rally Like Netflix, Inc. (NFLX)?

J.C. Penney: Can It Rally Like Netflix, Inc. (NFLX)?
By J.C. Penney (Brand New design website See article here) [Public domain], via Wikimedia Commons

J.C. Penney Company, Inc. (NYSE:JCP) shares rose as much as 2.44 percent in trading today. Although they’re still a far cry from the company’s six-month high, some are starting to wonder whether it can pull off a rally like Netflix, Inc. (NASDAQ:NFLX), which has jumped from around the $100 mark late last year to over $200 per share now.

J.C. Penney: Can It Rally Like Netflix, Inc. (NFLX)?

MarketWatch contributor Quentin Fottrell noticed some similarities between the two companies’ conundrums. He points out that just as Netflix, Inc. (NASDAQ:NFLX) made some major changes without a pilot test and lost the love of a lot of customers. And just like Netflix again, J.C. Penney Company, Inc. (NYSE:JCP) ran a major ad campaign essentially apologizing for the big changes and inviting customers back.

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Netflix, Inc. (NASDAQ:NFLX) became the comeback kid, bringing the customers back in and turning things around. But the question is—will J.C. Penney be able to do the same thing now that Ron Johnson is gone? At least one legendary investor seems to think so. George Soros filed a 13G in April indicating an almost 8 percent stake in the aging department store chain.

Fixing What Ron Johnson Did At J.C. Penney

Johnson did away with the company’s sales strategies and opted for an everyday low price model, alienating the company’s regular shoppers. After the television apology, customers posted more than 13,000 comments on J.C. Penney’s Facebook page. The comments covered everything customers miss about shopping at the department store chain.

The problem many see with the ad run by J.C. Penney Company, Inc. (NYSE:JCP) was the lack of information about what would happen next. Netflix, on the other hand, was more definitive and faster with its apology, which likely led to the major turnaround.

J.C. Penney And Netflix: Comparing The Incomparable

Of course J.C. Penney Company, Inc. (NYSE:JCP)’s problems were certainly more complex than Netflix, Inc. (NASDAQ:NFLX)’s problems were. Also it’s an entirely different kind of business. The retail chain was struggling before Johnson even came to the company, and it just so happened that what he did made its problems worse.

So J.C. Penney Company, Inc. (NYSE:JCP) needs a fix, and it needs one fast. And the fix needs to be not just one that brings the chain’s old customers back. It also has to bring new customers in if it’s going to see a big turnaround.

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