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.
Best Buy and JC Penney do have several things in common: They are discovering that re-training consumers on what to expect at their stores is no easy task. Best Buy is fighting consumer perception that it doesn't have comparable prices to internet giant Amazon and that its sales associates' technical expertise is lacking. JC Penney is seen as a firm that wasn't promotional enough under Mr. Johnson and can't compete with Macy's, both online and in-store.
Both retailers are also being navigated by marketing teams that have undergone massive changes. And, interestingly, neither retailers' top marketer boasts the CMO title. Last summer JC Penney tapped Debra Berman, a former Kraft Foods alum, to lead marketing. She wasted no time in tapping Doner, EVB and Victors & Spoils and is in the process of building out a marketing team decimated under the previous regime.
Since the announcement of Renew Blue, Best Buy has lost both its top digital exec, Stephen Gillett, and its top marketer, Drew Panayiotou. Scott Moore took over Mr. Panayioutou's duties.
Yet there's also a clear divide between these two retailers. Best Buy is expected to be profitable this year, despite sales and earnings declines. JC Penney, on the other hand, is anticipated by Yahoo Finance to bring in slightly less revenue than a year ago, in addition to posting fourth-quarter and full-year losses.
JC Penney and Best Buy executives declined to comment.
What's concerning analysts is that $13 billion JC Penney didn't provide a detailed holiday sales report in early January and followed suit with an equally simple quarterly sales report on Feb. 4. No news was not good news for the company's stock, which has shed nearly 40% since Dec. 31.