Roulston Research Thoughts on JC Penney’s Investor Day

September 26, 2012

“Valuation in JC Penney is in a state of flux for 2012. Volatility in the short term will reflect short term announcements and short term trading opportunities. There are few fundamentals to adequately measure progress until the 2nd quarter of 2013. At that time, comparables will have a benchmark. Sales will be lower. The couponing will not be the relevant attraction or comparable. There will be a further transformation to 30-40 shops (40-50% of store). At 10 shops we are now only seeing a taste. Buying the stock above $25 in 2012 is simply a momentum purchase. The fundamentals don’t yet justify speculation without an adherence to monitoring the process of the four silo implementation. It is a monumental undertaking of ALL management, not just the leader. We see few signs of recognizing this issue on the Street. It may make us sound bullish to talk about these steps and progress. Some are simple, some are unique, but many are more complicated and the discussion on these may sound overly optimistic (like prospects in a draft). This is not just a merchandising transformation. It’s exciting for retail, but cannot be scored via quarterly financial measurements alone. We will focus on unique insight to the four issues of culture change, technology, merchandising through the stores and the management and employee adjustments. These will all affect the long term growth and bottom line and create the new culture.”

This is just a small portion of the report. If you are interested in viewing the full version please contact Tom Roulston at

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