Penney J C Inc (NYSE:JCP)

CAPS Rating: 1 out of 5

The Company sells family apparel, jewelry, shoes, accessories and home furnishings to customers through department stores and Direct (Internet/catalog).

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Member Avatar superstar (99.67) Submitted: 12/26/2014 1:10:15 PM : Underperform Start Price: $6.43 JCP Score: -1.27

Over 5 billion in debt-- good luck paying that off.

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Member Avatar jed71 (86.73) Submitted: 12/15/2014 3:19:11 PM : Underperform Start Price: $6.38 JCP Score: +2.32

This is the kind of selection that has gotten me in trouble in the past. Not that there is anything great to say about JCP, but companies with a brand, even if that brand is weak, tend to get me into trouble. I just cannot resist down thumbing this stock as I think it represents one of the better short opportunities in the market right now. It’s a crowded trade, but I do think this company is in serious trouble regardless of what the pundits have said about a turn-around. There are very high expectations that have been laid out for JCP’s holiday sales and any slight miss is going to send this plummeting.

I admit I am probably old relative to most of the individuals who frequent MF. I remember going into JCP when I was a kid during their hay day since it was one of my mother’s favorite stores, especially during the Christmas season. I look at JCP now and just don’t see that same sparkle. What do they stand for? It’s my belief they don’t know what they stand for nor do they understand the market they are playing in. Do they compete with Macy’s and Kohl’s? Or Amazon? Or maybe Wal- Mart and Target? Yes, probably a little with each of them and they’re getting their clocks cleaned by all of them. Who do people time and again choose to go shop at? Pretty much every store I just named and not JCP. This company is a dinosaur which I think has difficulty appealing to any demographic. Do the young like them? Nope, they prefer Amazon and other e-retailers. How about the middle aged? No, Kohl’s or Saks or Macy’s is fine for them. The old? Maybe a few but not enough to save them. JCP used to have a large part of the blue collar market but I submit they have long ago switched to either Target or Walmart. What will JCP do to get its demographic back? I don’t think there’s much they can do at this juncture. They have squandered years of opportunity to win back market share by building crappy websites and selling products that are of Wal Mart / Target quality but without the discounts. Do you even remember the last time you were on the JC Penny’s website or in one of their stores? I don’t think I have ever gone on the website other than a cursory review before this pitch. JC Penny’s reminds me of two stores – Kmart and Circuit City. Kmart for its complete lack of ability to adapt to a changing market environment and Circuit City for destroying employee morale.

The financials of this beast are dismal, as well. Cash and short term investments show a balance of $683MM whereas their total debt is just over $5.4BB. They sure as heck better hope and pray interest rates don’t begin to rise or they’re toast no matter what kind of turn around they have planned. Interest expense is running just slightly over $100MM per quarter now, so I am getting their average interest rate on debt is just under 8%. Pretty steep if you ask me. Revenues have declined tremendously since 2009; they are consistently losing out to competitors in their bid to attract a demographic. I think their current $2BB market cap is steep considering the headwinds they face, but maybe that’s just me. A possible bankruptcy candidate for 2015.

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Member Avatar JCLscapXperiment (27.54) Submitted: 12/14/2014 7:08:27 PM : Underperform Start Price: $6.38 JCP Score: +1.32

Jan17 Put $1.25, $4 Strike

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Member Avatar bIlluminati (30.46) Submitted: 12/5/2014 11:53:33 AM : Underperform Start Price: $6.62 JCP Score: +2.26

Losing money.

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Member Avatar yooperking (47.50) Submitted: 11/6/2014 12:56:22 PM : Outperform Start Price: $7.53 JCP Score: -16.47

Happy days are here again, and JCP will benefit.

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Member Avatar meridius91 (64.35) Submitted: 10/16/2014 1:16:32 PM : Underperform Start Price: $7.40 JCP Score: +23.79

No differentiators over its competition and yet another victim of the shifting shopping habits of the 21st century consumer.

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Member Avatar ckfinance2003 (92.14) Submitted: 10/8/2014 4:34:45 PM : Outperform Start Price: $8.07 JCP Score: -25.62

The analyst day while not sunny should have been near expectations. Unless we do not trust management at all they are still on track. Today's reaction was way overdone, I bought in at the close.

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Member Avatar TMFNinjaPanda (59.64) Submitted: 8/26/2014 4:25:17 PM : Underperform Start Price: $10.80 JCP Score: +43.81

Because the age of brick and mortar is over.

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Member Avatar FoundryOnStocks (47.98) Submitted: 6/17/2014 3:19:26 PM : Outperform Start Price: $8.89 JCP Score: -33.88

$15 price target by October 2015.

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Member Avatar StanCan44 (< 20) Submitted: 6/10/2014 6:25:37 PM : Outperform Start Price: $8.79 JCP Score: -33.05

Their Sales has turned the corner and profits should return by the 4th quarter.

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Member Avatar zzgorch (44.09) Submitted: 5/15/2014 3:41:00 PM : Underperform Start Price: $8.56 JCP Score: +35.25

Zero cool factor, high rents, negative earnings and strategic confusion from the top down. Younger shoppers don't even think of "Penneys" when considering to spend their apparel dollars.

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Member Avatar thecontrarian (< 20) Submitted: 5/1/2014 11:15:53 PM : Outperform Start Price: $8.35 JCP Score: -33.08

Despite the whirlwind downfall of JCP over the past year, there are many reasons to believe that the turnout for JCP will be successful:

1. It has a proven strategy for profit.

Unlike many other companies that experienced downfall (e.g. RIM), JCP has a clear strategy and one that has been tried and proven successful. When RIM spiraled downwards, the problem was that there was no clear direction for improvement and management needed to make miraculous changes for a successful turnaround. However, JCP does not have to do anything dramatic - it merely need to go back to the way things were before Ron Johnson made the changes. In 2006, JCP had an impressive sales per square foot of $164, a growth of 6.3% from the previous year, which is comparable to that of Macy's $172.

2. Solid management in place.

The most obvious being the rehiring of Mike Ullman, who was CEO from 2004 to 2011 before being replaced by Ron Johnson. Ullman saw the success and profitability of JCP before it being ruined by Johnson. Less well known is the rehiring of Ken Mangone, the executive vice president of product development design and sourcing, who spent 35 years developing the private label brands at JCP. Private labels are the backbone of JCP and accounts for 50% of its business. With key people in place, the company is well positioned for recovery.

3. It understands what went wrong.

The 3/21/2014 10-K states " Our prior strategy focused on everyday low prices, substantially eliminated promotional activities, emphasized brands in a shops presentation and introduced new merchandise brands. These merchandising and pricing strategies did not resonate with our customers." Johnson also eliminated favorite brands like Ambrielle and St. John's Bay (which used to bring in $1bn to JCP). Recognizing this loss, Mike Ullman and his team has decided to bring those brands back.

The Sephora shops have been popular with consumers. During 2013, when "all other divisions experienced sales declines", "the women's accessories division, including Sephora, which reflected the addition of 60 Sephora inside JCPenney locations, experienced a slight sales increase." It is then common sense to do more of what already works well. JCP plans to roll out 48 more Sephora stores in 2014.
4. The worst is in the past.

Most of the expenses for the turnaround have been incurred in 2013 already. Its NOL will become an asset, as well as its anticipated $19 million in pension asset. As JCP puts it, "during fiscal 2014, we entered the “go-forward” phase of our turnaround as we position the Company for long-term growth". JCP has made the majority of the effort and expense for the turnaround and it's now waiting patiently for growth.

Although no one can guarantee that JCP will be able to turn itself around and the risk of bankruptcy is present, with the right people in the right place, there is hope for this favorite American brand.

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Member Avatar Fraudpro (< 20) Submitted: 3/19/2014 7:54:32 AM : Outperform Start Price: $8.42 JCP Score: -33.85

JC Penny is going to 20!!

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Member Avatar dmeredit (< 20) Submitted: 3/11/2014 4:35:55 PM : Outperform Start Price: $8.77 JCP Score: -37.76

Add me to the contrarians on this company. They have the real estate, the supply relationships and the muscle. What they need is better branding, better customer loyalty and better market sensitivity. I believe those problems can be fixed.

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Member Avatar DrGarnicus (39.83) Submitted: 3/11/2014 12:09:42 PM : Underperform Start Price: $9.14 JCP Score: +40.02

The numbers do not look good for them. I do not believe they will rebound as Macy's was able to. To me, the increase in price this year seems artificial. Seems most who are long are nostalgic.

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Member Avatar reidwolski (37.19) Submitted: 3/4/2014 12:40:03 PM : Underperform Start Price: $8.48 JCP Score: +34.46

JC Penny cannot find it's place with the retail market future. Every store I have visited in in disrepair. Employees don't care so customers will stop going no matter how much they discount.

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Member Avatar rrz174 (< 20) Submitted: 3/1/2014 7:32:02 AM : Outperform Start Price: $7.11 JCP Score: -21.44

Now that JCP has shored up liquidity concerns, sold off most unwanted inventory, and raised gross margins with the return of private label, I expect to see them beat earnings every qrt the next few years.

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Member Avatar MJKpayday (99.77) Submitted: 2/20/2014 8:15:42 AM : Underperform Start Price: $5.95 JCP Score: +4.49

Slowly dying big box retail.

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Member Avatar Truth2Power (54.70) Submitted: 2/17/2014 10:20:21 AM : Underperform Start Price: $6.17 JCP Score: +7.82

The damage is pretty irreparable at this point. Kohl's is eating their lunch in the mid-price range and they face increasing competition from Target on the low end and Macy's on the higher end.

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Member Avatar Vanmusicblues (< 20) Submitted: 2/11/2014 11:35:46 PM : Underperform Start Price: $6.15 JCP Score: +8.70

BK

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