Down In Its Own Rubble; The Sorry State Of J.C. Penney

J.C. Penney (JCP) is a struggling company with blurred strategic horizons and increased loses. Strategic revamping by changing layouts has been the key strategy of J.C. Penney this year. The company has tried to develop mini stores within stores but the strategy has faced many issues because of a deviation from the core competitive advantage i.e. promotions and low pricing.

Form a financial perspective, the company is not attractive to investors. The company has been facing loses and is trading at a very high P/E and EV/EBITDA, showing that the stock is overvalued. The new concept of Boutiques at the stores has posed many challenges as the company has annoyed many customers. This has made sales drop and customer loyalty to shift.

Although the company plans to focus on growth next year, we suggest a bearish stance until the efforts for the new mission start yielding benefits. We don't expect the stock to move up much and therefore have a sell rating. Read More