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Cramer: As JCPenney Loses, Who Wins?

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With the departure of CEO Ron Johnson, it's safe to say the turnaround at JCPenney didn't work.

As Johnson, famed for his success at Apple, tried to reinvent the department store, the company lost more than half of its market share and sales collapsed 23% in the first nine months of the fiscal year.

Largely Penney's core customers balked at Johnson's strategy which included everyday low pricing rather than discounts and sales as well as in-store boutiques featuring designer merchandise.

On Friday, hedge fund manager William Ackman said Johnson, whom he handpicked to turn around the struggling retailer, has made "big mistakes" and the impact has been "very close to a disaster."

As unfortunate as events may be for JCPenney, they may in fact be extremely fortunate for rivals. "Johnson's buffoonery has opened the floodgates for other retailers," said Cramer.

And that begs the question, as JC Penney loses who wins? Jim Cramer has a few ideas.

"The biggest winner has been Macy's and I think that a huge chunk of what is left in sales will still go the way of that chain," said Cramer. "I also like TJX, which I find to be similar to Penney's both in the sales it runs and in the merchandise it sells. It should be bought here."

Cramer thinks Gap is also worth a look; "Its clothing profile is very similar to the clothes that Penney sells. Go check Penney out, you will agree," he said.

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Wal-Mart and Target have gained new customers, however Cramer isn't sure that's a reason to buy these stocks. The increase in customer base may not be big enough to have an impact on share price – "though both have been doing quite well," Cramer added, but for other reasons.

And Cramer is downright cautious of Kohl's. "It should be a big beneficiary because of its similar merchandise but that once terrific growth retailer seems to have lost its way."

Liam Norris | Cultura | Getty Images

Finally, Cramer remains extremely skeptical of JCPenney.

"First, I totally dismiss the notion that JC Penney is worth buying," said the Mad Money host. There's talk of a private equity takeout but Cramer doesn't believe it. "I genuinely believe that JC Penney could go away."


Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

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