Septembers retail sales were better than expected, as consumers took advantage
of back-to-school discounts. The 24 national retailers that RetailSails.com
tracks saw September same-store sales increase 5.7% , the 25th consecutive
monthly gain. Last September, the same-store sales increase was 2.7%, so retail
appears to be moving in the right direction. One company that didnt have a good
month, however, is J.C. Penney (NYSE: JCP ), whose same-store sales declined
0.6% weaker than expected, and much worse than the 5.1% increase in the same
month last year. Incoming CEO Ron Johnson, the former head of Apple s (NASDAQ:
AAPL ) retail stores, is going to have his hands full. My advice is to sell your
JCP stock and buy Wal-Mart (NYSE: WMT ) instead. Heres why: Liz Claiborne J.C.
Penney is betting its future success on a brand whose best days are behind it.
Designer Liz Claiborne died at the age of 78 in June 2007 and hadnt been an
active part of the company that bears her name for 17 years prior to her death.
By the time Liz Claiborne, Inc. (NYSE: LIZ ) CEO Bill McComb took over the
company in 2006, the brand was in desperate shape. J.C. Penney worked a deal in
2007 to launch Liz & Co. in its stores, and so began a relationship that
culminated Oct. 12 with the news that J.C. Penney is acquiring the worldwide
rights to the Liz Claiborne family of brands, as well as the U.S. and Puerto
Rico rights for the Monet brand, at a cost of $288 million. Anyone who follows
retail knew this day was coming given the agreement they signed in 2009, which
gave J.C. Penney the option to acquire the brands in 2014 or a second option in
2019. Liz Claibornes financial difficulties moved up the timetable several
years. Wendy Liebmann of WSL Strategic Retail believes the Liz Claiborne brand
helps differentiate J.C. Penney from other mid-tier stores like Kohls (NYSE: KSS
) and Macys (NYSE: M ). I dont buy it. Paying almost $300 million for a brand no
one else wanted seems like a complete waste of shareholder cash.
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