While J.C. Penney Company, Inc. (NYSE:JCP) has been struggling for some time to get customers to come into its stores, the retailer seems to have found a new revenue stream by getting other companies to get near its Plano, TX headquarters.
J.C. Penney’s announcement
The company announced on Feb. 6 that it had hired three firms to develop 240 acres (97 hectares) around Plano. Public records put the value of the land at $90 million but Fehmi Karahan, chief executive officer of Karahan Cos., one of the firms hired by J.C. Penney Company, Inc. (NYSE:JCP)’s believes that that figure could double once the land has been developed.
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All said, it’s estimated that the development could yield J.C. Penney Company, Inc. (NYSE:JCP)’s up to $200 million. JCP moved from New York to Plano in 1987 and in lieu of strong sales, that move is looking better and better.
The project won’t be completed for some years, but it’s believed that J.C. Penney will see revenues from the project in as little as three to four months.
Oh, Ron Johnson
Chief Executive Officer Mike Ullman had already planned on developing the land when he was replaced by Ron Johnson in 2011. Johnson, in what can only be called a series of failures, halted the development project before trying to turn J.C. Penney Company, Inc. (NYSE:JCP) into an upscale retailer ultimately alienating its core group of customers.
In the revolving door at JCP, Ullman returned in April last year to try to reverse the damage done and the course the retailer took under its new captain.
“We have seen a great deal of business and residential growth around the home office over the last 25 years, and now is the time to capitalize on this attractive asset,” Katheryn Burchett, senior vice president of real estate and property development at J.C. Penney Company, Inc. (NYSE:JCP), said in the statement on Feb. 6.
Joey Thomas, a spokesman for J.C. Penney, when reached by Bloomberg declined to speak of who might be interested in the land.
“We’ve chosen to invest the land with a partnership, as there’s a favorable financial upside to realizing the full value of the land over time,” Thomas said in an e-mail. Karahan did, however, say that an unnamed hotel chain was in talks with the partners and that they would be one of the buyers who would start generating cash for the four firms within six months.
Some though was given to an outright sale of the land but it was deemed much more valuable if roads were built and zoning rights were secured before beginning the sell-off.
From borrowings and a stock offering, J.C. Penney Company, Inc. (NYSE:JCP) has raised nearly $4 billion since Ullman’s return less than a year ago. At the end of last month, the retailer had over $2 billion in liquidity, a target set by Ullman. Under his direction, the company also experienced its first rise in same-store sales since 2011.