Monday, March 25, 2013

Dollars, not sense

I've been seeing this JC Penney story heating up for the last few days. For those that don't know, JCP used a lesbian couple in an ad for children's cloths or household items or something. It was last year on the heels of making Ellen Degeneres, who is openly gay, their spokesperson. The ad contained the couple and children as a family. So 1 million JC Penney shoppers threatened boycott and organized some anti-shopping movement, called 1 Million Moms, over it. JC Penney then released another ad of 2 gay men and their children. Once again the Internet ire, sparked by 1 Million Moms, is reaching critical mass.

So it's nice to see a company support some logic and have moral fiber along the way. Starbucks is in the same boat at the moment. One shareholder had some things to say about Starbucks support for marriage equality and the CEO Howard Schultz told the guy to sell his shares if he didn't like it. It went one longer than that, but that's the gist. So, these are 2 companies who stand up for what they believe in and the things they believe in are altogether wholesome. I know people feel how they feel about gay marriage and lifestyles, but suffice it to say that JCP and Starbucks are not advocating violence and death and segregation and bias. They are trying to give everyone a fair shake.

Here is why they are both potential wrong for their actions. If 1 Million Moms actually got a full one-million people to stop shopping there, what would that do to JC Penney? Are they gaining the favor of 1.1 million gay individuals there they end up net +100,000 shoppers? What if 1,000,000 people walk out and 100,000 walk in? Then they lose 900,000 shoppers worth of revenue. JC Penney is not a 501(c) charity. They are not non-profit. They are a for profit company that is publicly traded. They are answerable to shareholders, not values. Morality doesn't keep the lights on. JCP also hit an all-time high on their share price in 2007 at $80 per share. In April of last year they were at just shy of $40 per share. As of this very moment they are at $15.01 (down from $15.23 when I began this post). JC Penney is losing relevance and market share to online shopping (as are many large and big box retailers around the country). Is now the time to further dilute the clout they have? What if gay individuals have invested in that company because of their internal philosophies of supporting gay rights, yet their public actions and spiteful nature of ad placement have actually removed value and in some round about way, they've hurt the people they support? It's a stretch, I know and who the hell is investing in JCP these days anyway? The point is that the business of business is business. Set up a foundations, charity, NPO or any other group to champion your cause, if that's what your into, but gambling with shareholders money to promote something? That's bad business.

And not all shareholders will agree with your cause, as we saw in the case of Starbucks' Schultz vs. Strobhar. Strobhar is anti-marriage equality and an investor in Starbucks. He let his opinion be known at a shareholder meeting and Schultz, the CEO, told him to sell his share and went on some diatribe about how the company is being held down by close-mindedness or some such nonsense. I hate to break it to you Schultzy, but Strobhar's money is just as green as anyone else's. Maybe his ideas and his votes as a shareholder are weighing down your innovation and out of the box planning, but that's why there are so many shareholders - so one person doesn't take control. Another company putting their own personal values against the one thing with real, measurable value - money. Are you willing to leverage your financial success and fiscal footing against a cause? Would you donate next month's rent to a charity of choice? The economy is still in recession (don't believe the hype, things are better but not good). Starbucks is going up in price at the same rate of mortgage default and job loss in this country. Mayor Bloomberg is gaining support from other lawmakers and like minded politicians to engage in Gestapo tactics for banning anything deemed unhealthy. Will all newly married gay couples pull Starbucks up by the bootstraps if need be? I know Starbucks isn't folding and I don't mean to insinuate they are or be over the top, but I'm just aligning strategic vision with the response they'd receive.

At the end of the day, as I always say, the business of business is business. You've read it here a million times. So again, I love that Starbucks and JC Penney actually have a moral compass (I'm not debating whether I think it points true North or not, that's not the point here). Not many companies do. But betting their future and the money of investors (and employees) on a belief, is irresponsible. Make money, you're a corporation. That's your job. Support your causes as individuals, on your own time, on the side, with your own cash.

I'll still drink gigantic, frozen, chocolatey, coffee drinks from Starbucks while shopping in JC Penney. Their products still appeal to me. But I wouldn't invest in either way. When I give them cash, I get a product. When I invest cash, I'm not part of a cause that may win or lose me money. Investing is always  gamble, but I can track cash flow and market capitalization. I can't track feelings, spite and goodwill.

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