5 Things Investors Need to Know About J.C. Penney's Turnaround презентация

O’Reilly

Ron Johnson, creator of the Apple Store, was brought in as CEO to revamp the brand by activist investor Bill Ackman
Hiring Johnson was an attempt to bring the 100 year-old department store into the 21st century
However, rebranding efforts alienated customers

$11.86 billion from FY 2011 through FY 2014
Profits over this period swung from $389 million to ($1.4) billion
Situation became so desperate that the company had to raise capital via a share offering in October 2013

Ullman, Ron Johnson’s predecessor, came out of retirement and took the helm
Whereas Johnson sought to change the retailer’s DNA, Ullman focused on the basics
Over 90 store closures were announced
Eliminated practically all of Johnson’s initiatives

the quarter ended February 2, 2014 at 23.8%
Largely the result of inventory markdowns on merchandise accumulated during Johnsons’ tenure
Highest gross margins generated by JCP were in FY 2010 at 39.4%
This is important, because JCP is attracting customers back without drastic markdowns

year has been robust
Q1 growth of 7.4%
Q2 growth of 6.0%
Q3 growth of 6.4%
Company expects to be free cash flow neutral this year

out of the woods yet
Sales are still well below their peak:

a GAAP basis
Analysts estimate it will take until the end of this decade for sales to recover at current rates

J.C. Penney has managed to stop the hemorrhaging
JCP expects to be free cash flow neutral in current fiscal year
Company generating strong same-store sales growth
Full recovery, if it happens, will take at least another three to four years