J.C. Penney (NYSE: JCP) is a chain of mid-tier departmental stores based in Texas, USA. The company owns more than 1000 stores in 49 states all over US. The management of the company has been competent in policy making and the recent meetings with Piper Jaffray analyst provides a deeper insight into company’s drive for profitability and approach to strengthening the fundamentals.
Analyst Neely Tamminga met with the top executives of JCP, namely Ed Record and Trent Kruse. Ed Record holds the office as Chief Financial Officer of J.C. Penney, while, Trent Kruse is the head of Investor Relations. The analyst met the pair in New York and highlighted a few concerns on behalf of the investors, which include, the Selling, General and Administrative expense cuts – which are likely to impact P&L for the current year, plans to make a capital expenditure of $375 million during the year 2016 towards core remodeling, Sephora roll outs and digitalization and lastly, appliances being piloted in 22 stores.
According to the analyst, there is plenty reason to believe in J.C. Penney given the abundance of initiatives. The management has been diligently involved in making policies to increase store traffic leading to sales which in turn leads to profitability. The analyst remained largely confident of the stock’s bounce back ability and believes $2 billion out of the $6 billion revenue lost will be provided for, as the company seeks to accumulate EBITDA in excess of $1.2 billion.
Mr. Tamminga maintained the price target at $20 and the overweight rating. The analyst opinion for JCP has 1 strong buy, 8 buy, 12 hold and 4 underperform ratings. The stock closed at $11.22 yesterday.