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Cramer: JC Penney is about to smoke competition

Just as Jim Cramer thought J.C. Penney was left for dead with no hope, it makes a comeback. Yes, that's right—J.C. Penney is back. And the new J.C. Penney has some spunk to it, which leads him to believe that it will fight off the competition.

"Out of nowhere, J.C. Penney's got its groove back; I think it is roiling all the other merchants out there," the "Mad Money" host said. (Tweet This)

In Cramer's opinion, its new CEO, Marvin Ellison, is taking the company to a new level with his humility and competitiveness. It is almost as if he is aware that is goal is not just to enter the retail playoffs but to be the champion. It is exactly this type of lofty goal setting that has been sorely missing for a long time.

The CEO has backed up his claims with 4 percent comparable-store sales and plans to get them to 5 percent. Cramer finds this amazing for the old horse J.C. Penney, considering the damage that was done by its previous CEO Ron Johnson.

"He almost destroyed J.C. Penney, consistently taking the same-store sales down to the high negative 20s, an extraordinary feat. I mean, you almost have to actively drive customers away from the stores with the threat of physical violence to repeatedly deliver such terrible numbers," Cramer said.





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To Cramer, J.C. Penney's success all came down to expectations. Even before Johnson's reign of terror, the company did not aspire to be the best. It only aspired to be good enough just to keep the 87 million customers it had happy. That only meant a lot of promotions around the holidays and a dedicated staff that was paid slightly more than the minimum wage.

However, Ellison speaks about J.C. Penney as being a world class retailer, and he has backed it up with evidence of the people he has hired who are dedicated to making Penney a real ecommerce player. That includes Mike Amend, former vice president of online and mobile from Home Depot and Mike Robbins, former senior vice president of global supply chain for Target.

These hires show that Ellison is committed to improving the company's omnichannel presence, and Cramer thinks the bar is low enough that he could beat it, because these days everyone is struggling with the omnichannel challenge.

And out of all of the companies that have made large efforts to improve its omnichannel business such as Nordstrom and Liberty's QVC, Cramer's got his money on J.C. Penney because he expected so little from it.

What Cramer always liked about J.C. Penney was its heavy emphasis on private-label brands, and it plans to continue with that. Cramer likes private labeling because it is easy to discount, and he feels confident that Ellison plans to use execute on that discount.

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So how much damage can a revitalized J.C. Penney cause to the retail industry?

"I think Penney is a lot like Kohl's, and you can see that Kohl's sure couldn't deliver this quarter. It can put the hurt on Macy's, too, as it will be perceived as being underpriced versus Macy's," Cramer said. (Tweet This)

As Ellison continues to re-energize each store, Cramer said that stores will have no choice but to take notice. So, it looks like just as Cramer considered J.C. Penney in the dead and gone category with Sears, it has found a way to wake up from the dead.

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