Dear Mr. Berko: In 2007, my stockbroker had me buy 100 shares of J.C. Penney at $73. Months later, he had me buy another 100 shares at $62. And because he was very certain it would recover, he had me buy 100 more shares when it had fallen to $47. Finally, in 2009, I bought my last 100 shares at $28, giving me an average cost of $52.50 per share. I still own the stock and want to know whether I should sell my 400 shares or buy the stock again at $1.36 a share.
— HD, Bloomsburg, Pa.
Dear HD: Wow! I think your broker must have slipped into the gene pool when the lifeguards weren’t watching.
James Cash Penney was from Missouri, the same state that gave us Harry S. Truman. They could have met, played checkers together and even talked serious politics. However, after graduating from high school, Penney moved to Colorado on doctor’s orders, hoping a better climate would improve his rheumatism. And in 1898, Penney went to work for Thomas Callahan and Guy Johnson, who owned the Golden Rule dry goods stores in Colorado and Wyoming. In 1902, Penney opened his first store in Kemmerer, Wyo., and by 1907, he owned four locations. In 1912, with good past successes, Penney had opened 34 stores in the Mountain States under the J.C. Penney name. By 1928, Penney had over 1,000 stores, generating $190 million in revenues — equivalent to nearly $3 billion in today’s dollars.
Wonder of wonders, in 1940, a lad called Sam “Sam Boy” Walton took a trainee job at a J.C. Penney store in Iowa. He got a lot of good training; however, 18 months later, Walton was drafted into the Army. In any event, by 1973, there were 2,050 J.C. Penney stores selling thousands of products and pumping profits. But that’s when the troubles began, as the company realized it was competing with Walmart and Sears, which were selling merchandise at discount prices. Then came the 1990s, with big-box stores such as Costco and Target, Circuit City and Best Buy. J.C. Penney’s management fumbled. Then came Amazon.com, and its management stumbled. Along came similar e-commerce platforms, and its management bumbled. And as revenues dropped 40 percent in the past 12 years, J.C. Penney’s store count imploded, falling from 2,050 to 850.
