Now The Time To Enter J.C. Penney? (JCP)

Legendary real estate investors William Ackman of Pershing Square Capital and Steven Roth, chairman of Vornado Realty Trust (NYSE: VNO) are going to be added to the board of directors at J.C. Penney (NYSE: JCP), as the struggling retailer seeks to improve its growth prospects.

In addition to the new additions to the board, J.C. Penney will close stores in Morrow, Ga., West Dundee, Ill., Des Moines, Iowa, High Point, N.C., and Culpeper, Va., as well as a JCPenney Home Store in Duluth, Ga. In addition to these closings, it will also also 19 outlet stores that carry catalogue merchandise.

Call centers in Grand Rapids, Mich. and Albuquerque, N.M. will also be closed as well.

J.C. Penney said the moves will be accretive to 2012 by 7 cents per share, and it will take an 8 cent charge in the fourth quarter and a 5 cent share in fiscal 2011.

Mike Ullman, III, chairman and chief executive officer, said, "We are focused on increasing profitability and accelerating our growth. To achieve this, we undertook a thorough evaluation of our operations to ensure we are managing costs and allocating our resources to the strategies that will best drive both our top and bottom line, with the objective of delivering enhanced returns to shareholders."

Mr. Ullman continued, "The actions we are announcing today are significant steps in an ongoing process to ensure we are best managing costs and allocating our resources effectively to the strategies that will allow us to improve margins and drive profitable sales over the long term. We see significant opportunities ahead in our core department store and online businesses as part of our Long Range Plan and we are well prepared to capitalize on them in 2011 and the years to come."

If Ackman and Roth are successful in turning around the Texas-based retailer, then there is the potential for tremendous shareholder value there.

Originally, many news outlets thought that Ackman would try to get J.C. Penney to spin off its massive real-estate holdings, similar to what Dillard's (NYSE: DDS) just announced. Ackman has said that he wants to improve the company's operations, not the real estate in this case, and the announcements made today are a step in the right direction here.

Perhaps in time Ackman will discuss the real estate holdings of J.C. Penney, but I suspect this won't be the case. He tried to do something similar with Target (NYSE: TGT), and it didn't work out. I feel that he's been burned once trying to do it this way, he won't do it again.

Disclosure: no position in names mentioned