JC Penny Company Harvard Case Solution & Analysis

Qualitative Analysis:

The performance of JC Penny Company is very poor from the financial years 2010 to 2012. Both the qualitative and quantitative aspects appears to be poor, it can be said that there are many factors which leads to the poor performance of the company. The policies and strategies of the management fails to increase the wealth of shareholders and the level of profitability is also decreased due to the poor economic conditions of the region, great economic recession is the primary reason which leads to the poor performance of all the companies. Many industries are suffering due to the recession, however, it can be said that the economy is now in the phase of recovery and the profits of many companies are increasing day by day but this is not the case for JC Penny.

By analyzing the recent performance and strategies it can be said with certainty that the strategies and actions of the senior management are the primary reasons which leads to the disastrous results. There are many situation and instances where the right policies can increase the profitability of the company. Ullman played a significant role in the good performance of JC Penny in 2010 and 2011 but he stepped down as CEO, the senior management should have to force him not to leave the position, had Ullman was in his position in 2012, the results might be quite different. On the other hand, the newly implemented pricing strategy also appears to be ineffective and fails to improve the financial and operational performance of the company.
J.C. Penney’s “Fair and Square” Pricing Strategy Harvard Case Solution & Analysis

Quantitative Analysis:

The quantitative performance of JC Penny also seems to be worst, all the ratios and trends are declining from the previous years which indicates that JC Penny is facing quite difficult trading conditions. The liquidity ratios are declining in 2012 as compare to 2010, the ideal current and quick ratio for any company should be almost 2:1 and 1:1. Both these ratios of JC Penny are very low as compared to the pre-described threshold. The poor liquidity position also enhances the claims of several equity analyst which have predicted that JC Penny is facing very poor liquidity conditions.

On the other hand, the profitability position also appears to be poor, all the profitability ratios are positive in the year 2010 and by the end of 2012, the profitability ratios becomes negative except for the gross profit margin which is also decreased by a healthy rate. The decrease in gross margin could be due to the increased direct costs, although the management have terminated 10% of the workforce but the gross profit margin is still declining which can be very dangerous for the company. In addition to this, the net profit margins are also decreasing drastically, poor economic conditions can be the main reason of this, but excessive remuneration of executive management can also be another factor which leads to the negative profitability....................

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