Fox Business
Expand
Browse All Video
Watch Live

You're watching...

Analyst Downgrades JCP to Neutral

Details

  • Description

    Macquarie Group senior analyst Liz Dunn explains why she is downgrading J.C. Penney stock.

  • Duration 4:19
  • Date

Clips

Also in this playlist...

Latest Video

Auto-advance: ON

Auto-advance
View All

Transcript

This transcript is automatically generated

-- -- Well it has been one year now since JC Penney revamped its south into an apple like retail store under its new CEO Ron Johnson.

But -- shares down more than 50% since then.

Is that strategy working now.

Liz Dunn senior -- -- choir group who covers JC Penney is here with why she's downgrading the stock and if she thinks the transformation will ever succeed this welcome Tim of the name of your most recent note on JC -- if we ran as -- we be nervous to downgrading to neutral so that was put out.

Early January to feel similarly.

I do I mean there was a whole -- -- themes so.

In my defense but it's it's great I love yeah I think that the transition has been very tough.

So what is the biggest challenge what's been the biggest -- by the CEO.

I think the pricing strategy consumers just stay haven't understood -- they are not responding positively to it and I think that's been a real struggle and so -- Benson.

And changes in the company's re directed a little bit they're adding back some promotions but I think the pricing strategy.

Really.

Was was maybe a little bit poorly thought out and certainly.

-- -- And -- -- confusing for JC -- customers to know.

What the pricing strategy is -- to know whether items are full price Iran sailor power they labeling I know that was part of the change -- the strategy to that they're gonna put.

The retail price in the JC -- price -- -- similar to TJ Max I mean so many plans that you hear about the media.

What's the take with the customer they getting a firm message seems like that's part of the problem to know.

Yet you know it's funny I think the company was really trying to simplify they really wanted to -- by the pricing strategy.

And to that was what all of this move was I was about simplifying.

And more pricing integrity but the consumer was just really confused they didn't know if they were getting value there was nothing there that was very.

Overt to suggest values -- the company has made some tweaks.

They're now showing an MS RP if you well.

And there are also emphasizing in their marketing.

What similar products would cost elsewhere so they're trying to really conveyed value while simplifying the pricing.

And you know I think I think it's still very much a work in progress so -- then what are your impressions when you go into a JC Penney stores do you like the clothing RD.

Are the items fashion forward some of the other merchandise.

My entire passages by JC Penney's today -- it's not yeah but I didn't think that this story looks really good.

It's a big improvement it's a lot cleaner there's less clutter.

Some of the new products are flowing and and we've seen -- new force that's just didn't in February some new brands that there adding.

And some announcements about brands that are on the com.

And so I think they are making progress it's just whether or not they -- customer will respond to -- brands and these -- changes.

You know they're trying to attract a new customer they're trying to regain some of that share that they've lost of the last two decades.

And I think that's that's going to be a long process but I personally think that the stores do look a lot better lot cleaner better products.

Would you say the toughest challenges for -- are behind and now that 22 dollar price target what's your forecast for the next well let's -- back to forecast but.

When DC -- that reaching that level and and how.

Far beyond it can it go.

-- I mean I don't know -- the toughest challenges are behind them I think that.

Really they need to in the near term.

Turns sales into positive territory and increasingly it sounds like that might not happen in the first quarter right now I'm still forecasting -- but if you just listen to the company's body language some of that.

Presentations and and reports we've seen from them.

Suggest -- -- might take longer than in the first quarter deceased sales turn into positive territory -- it's right now there's a lot of concern about the balance sheet.

As well.

Do expect a management shake up the CEO Ron Johnson came in with such.

Anticipation -- optimism formally apple of course.

It still seems like he has the support of the board and I think that they've been very.

Conscious.

All along that this transition would take at least a year so right now they're looking at -- and perhaps it's it's been a little bit more severe in terms of the downturn and they.

Anticipated but it sounds to me like he still has the support of the board.

And he gets you know he'll have a little bit more time to -- to strategy see that works okay -- ban on JC Penney force today thanks.

Load More