This morning, department store chain JC Penney, which has been floundering since the departure of CEO Ron Johnson, reported a 12% earnings slide and a $586 million loss in the second quarter. Electronics chain Best Buy, on the other hand, reported a jump in earnings of $266 million, compared with just $12 million in this period last year. The market’s reaction made Best Buy the best performing stock in the S&P 500 this year.
What has Best Buy managed that JC Penney hasn’t?
They’ve cut costs: Slashed them, actually: $390 million in 9 months, on their way to a goal of $725 million, partly by closing underperforming stores and reorganizing their supply chain.
They’ve gotten online right: With a 10% increase in revenue ahead of a site relaunch planned for next year. JC Penney’s web traffic is falling.
Pop-up stores featured strong brands: Best Buy is seeing a lot of sales from Samsung Experience Shops and Windows Stores-within-stores. JC Penney’s pop-up shops, featuring less well known names like Joe Fresh and Jonathan Adler, have been less successful.