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Deutsche Bank's Top 10 Takeaways From Buy-Rated JCPenney's Analyst Day

Deutsche Bank's Top 10 Takeaways From Buy-Rated JCPenney's Analyst Day - J.C. Penney Company, Inc. Holding Company NYSE:JCP

Paul Trussell, an analyst at Deutsche Bank, attended J C Penney Company Inc JCP 4.42%'s Analyst Day event and stated that the company presented a "readily achievable" three-year plan.

Despite Trussell's optimism, he acknowledged that the bears will require "more reassurances" that JCPenney's near-term third- and fourth-quarter hurdles "can be cleared first." With that said, the analyst did offer his top 10 takeaways from management's presentation.

10 Takeaways

1. Targets: JCPenney's new three-year target of 3–4 percent sales compounded annual growth rate (CAGR), 75–100 basis points of margin expansion, $450million–$500 million in net income and $1.40–$1.55 in earnings per share appear to be "achievable, if not beatable."

2. Traffic Trends: JCPenney is already seeing positive traffic trends due to new integrated marketing techniques.

3. Loyalty: The company's new loyalty program has already generated a 5 percent increase in revenue per customer.

4. Private Brand Names: Private brands continue to drive value for the consumer and allow the company to be quicker to market new fashionable items.

5. Store-In-Stores: Sephora and other store-in-store initiatives boast higher sales per square foot and the company is expanding its efforts in this segment.

6. Boutique+: Boutique+ was introduced in 500 stores to broaden plus-size sales.

7. Appliances: Initial appliance sale tests in 22 stores was successful and the company will roll out appliances in 500 stores in the fall.

8. Management/Associates: Management has a plan to boost productivity of its store associates who will now focus more on selling and helping clients.

9. Omnichannel, E-Commerce: Growing mobile and the omnichannel remain top priorities, and management will continue investing in these initiatives.

10. Supply Chain: JCPenney continues to "make strides" in improving its supply chain channel through localization and modernizing the entire process.

Shares of JCPenney remain Buy rated with an unchanged $12 price target.

DateFirmActionFromTo
Aug 2016Morgan StanleyMaintainsUnderweight
May 2016UBSMaintainsSell
May 2016CitigroupMaintainsNeutral

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