JCP enters next phase of turnaround; shares rise

September 13 23:57 2015

J.C. Penney were up more than 3 percent Monday, defying a down day for the markets, after one analyst said the department store has “multiple levers to pull” in working toward its goal of $1.2 billion in EBITDA by 2017. While upgrading the retailer’s shares to “buy” from “hold,” Deutsche Bank analyst Paul Trussell listed a handful of opportunities for the company to improve its margins, including the use of new technologies to limit unintended markdowns.JC Penny Decided To Eliminate 2,000 Jobs

He likewise pointed to several enhancements to its store presentation as potential drivers of sales. “The company is already proficient in the art of retail under under its seasoned merchandising team with what we think are the right brands and assortment,” Trussell wrote. “New CEO Marvin Ellison is now driving the next step of applying the science of retail to bring J.C. Penney up the curve.”

Following a disastrous—and widely publicized—failure to reinvent the traditional department store, Penney has grown its same-store sales seven of the last eight quarters, including its fourth straight increase in the most recent quarter, according to Retail Metrics. By bringing back a larger penetration of private label brands, which have long accounted for a huge chunk of the retailer’s sales, and returning to its promotional ways, Penney once again has about 87 million active customers.

Now, the goal is to get them to increase their visits, and how much they spend. Among Penney’s strategies are ramping up its partnership with specialty beauty shop Sephora, where comparable sales growth continues to outpace the overall company, and adding new fixtures and lighting in major departments including handbags.

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