Cramer says Macy's and JC Penney are becoming 'relics' of retail past

Key Points
  • "Mad Money" host Jim Cramer tapped into his nostalgia for brick-and-mortar retail after earnings from Macy's and J.C. Penney.
  • With a new CEO at the helm, Macy's has some positive drivers behind it, Cramer said. Similarly, J.C. Penney has solid makeup and appliance franchises.
  • But brick-and-mortar as a whole could be squandered by the blossoming ecosystem that is e-commerce, the "Mad Money" host said.
M & JCP becoming 'relics' of retail past

When CNBC's Jim Cramer listened to Macy's and J.C. Penney's conference calls after the department store chains reported earnings, he wanted nothing more than to root for them.

He wanted to hear that holiday sales would be so good that they would bring the retailers' stocks back to their heydays, when Macy's traded in the $70s and J.C. Penney's in the mid-$40s.

As of Monday's close, Macy's stock was $19.33 a share and J.C. Penney's stock was at $2.95 a share.

"Instead, we heard the same kind of tale of woe, the struggling stories, the same defensive nature, with the only twist being a better control of inventory and a sense that they can continue to plod along," the "Mad Money" host said.

Macy's reported mixed third-quarter results, but the conference call actually had a lot to like, Cramer said. CEO Jeff Gennette touted the company's high dividend and efforts to revamp its loyalty programs.

Similarly, J.C. Penney started to regain control of its excess inventory, showing strength in its in-store Sephora sales and appliances.

But even as J.C. Penney CEO Marvin Ellison spoke about bringing a balance of art and science into retail, Cramer wondered how the brick-and-mortar chain could sufficiently compete with companies like Amazon.

J.C. Penney may recognize what its customers like by reviewing their past purchases, but Amazon's systems already do that and more, offering items at comparable or lower prices.

J.C. Penney has to pay rent, sales staff and have its on- and offline systems up and running; Amazon only needs a seamless online platform.

"Now, look, I don't mean to pick on Macy's or J.C. Penney," Cramer said. "It's just that I have a lot more nostalgia for these chains than for the relative newcomers like Nordstrom and Kohl's ... especially since I grew up in a household where all we did was talk about retail."

Nordstrom and Kohl's are different entities altogether, Cramer said. Nordstrom has less than half of the stores Macy's and J.C. Penney have and is still adding to its count, as is Kohl's. Meanwhile, Macy's is closing 68 stores and J.C. Penney is doing the same with 138 of its own.

But all of these brick-and-mortar chains share the desire to make their stores indispensable, and most of them are talking about installing ways for customers to buy online and pick up in store — "BOPUS, for lack of a better acronym," Cramer said.

However, to Cramer, the BOPUS narrative feels forced for department stores, most of which don't have convenient areas for in-store pickups (save for, perhaps, the strip-mall-based Kohl's).

And if anyone had to re-do Macy's in 2017, they either wouldn't or they would make the retailer an entirely online business, he said.

"That's really the sad fact," Cramer said. "Just like we would never have built cars for humans if we had known that robots could drive them better, we wouldn't have built malls knowing that the internet could be a more efficient ordering system. Yes, there will always be a use for department stores, but they're kind of relics. And there's no reason they need to stay alive."

WATCH: Cramer gets nostalgic about brick-and-mortar retail

Cramer says Macy's and JC Penney are becoming 'relics' of retail past

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