J.C. Penny is a retailer, operating 3,800 stores, including 1,111
JCPenny department stores, located in all 50 states, Puerto Rico
and Mexico. In addition, the company operates 49 Renner
department stores in Brazil. The major portion of the company's
business consists of providing merchandise and services to
consumers through department stores, catalog departments and
home furnishings. Through its subsidiary, Eckerd Corporation, the
company operates a chain of 2,640 drugstores located throughout
the Southeast, Subelt and Northeast regions of the United States.
Department stores, the company's catalog and the Internet
generally the same customer, have virtually the same mix of
merchandise and the majority of catalog sales are completed in
department stores. In addition, department stores accept returns
from sales initiated in all three locations.
Through its indirect wholly owned subsidiary, Eckerd, the company
operates a chain of approximately 2,640 drugstores that include
the retirement destinations of Florida, Texas and the Carolinas.
Revenues for this segment represented 41% of consolidated net
sales for fiscal 2000.
(Source: J.C. Penny)
Reasons To Invest
Shares of J.C. Penny are up more than 100 percent so far in the
year 2001. The stock has been one of the best performers in the
S&P 500 (SPX.X) this year, and for good reason. Further, there's
good reason to expect that the company and its stock will continue
to out perform its peers and, indeed, the broader market.
After having its share of problems, the company hired a turnaround
expert in Allen Questrom, who is currently the Chairman, and Chief
Executive Officer. Questrom has since reorganized, reshuffled,
and turned J.C. Penny around for the better, and the stock price
certainly reflects that much. Prior to taking the helm at Penny's,
Questrom performed his magic at other, at the time, beleaguered
retailers such as Federated Department Stores and Barney's. Both
companies are now, for the most part, hitting on all cylinders.
And so is J.C. Penny.
The company has gone to great lengths to reduce its long-term debt,
which now amounts to roughly $5 billion. In addition, management
has shed unprofitable business divisions and tightened up
inventories. All of the aforementioned actions have resulted in
a boost to margins and earnings, which are now slated to blossom
by about 100 percent next year. Obviously such growth is not
sustainable, once the impact of the company's reorganization are
fully discounted. But the company should be in a long-term
position for growth nonetheless.
The only real clear risk in the stock current is the potential
for further deterioration in the economy and consumer spending.
But if those two variables stabilize, or at the best rebound
over the coming quarters, shares of J.C. Penny should continue
out performing the broader market.
Shares to Qualify = 1 Accept Foreign Accounts: Yes
Auto-reinvestment = Yes Temper Enrollment Serv: Yes
Min/Max Investment = $25 to $10,000/month
Dividend: 0 Cash: $1.50 + 6 cents/share Auto ReInvest: 0
Industry Group: Retail 52-week high=$29.50
Annual Dividend Per Share= $0.50 52-week low =$ 8.63
Last earnings 08/15 est=(0.20) actual=0.11
Next earnings 11-17 est=0.14 versus=(0.24)
P/E = N/A
Strong Buy = 1
Moderate Buy = 3
Hold = 6
Moderate Sell = 0
Strong Sell = 0