Is J.C. Penney’s Stock a Buy With These Apple-esque Changes?

With shares of J.C. Penney (NYSE:JCP) now trading around $17, is JCP an OUTPERFORM, a WAIT and SEE, or a STAY AWAY? Let’s analyze the stock with the relevant sections of our Cheat Sheet investing framework:

There is one statistic that makes J.C. Penney’s current sales predicament clear: the retailer makes less than one half the proceeds of Gap (NYSE:GPS) per square foot of floor space. So far, Chief Executive Ron Johnson’s attempt to restyle the company has been meet with a mass exodus of customers and correspondingly dismal sales; in the last quarter, sales fell by 26.6 percent.

C = Catalyst for the Stock’s Movement:

When former Apple (NASDAQ:AAPL) executive Ron Johnson joined J.C. Penney in 2011, he saw “excessive promotions, commodity product, and a poor store experience” that limited their market to discount customers. To rectify this problem, Johnson chose to begin a complete retail overhaul; he eliminated sales and coupons in favor of “everyday low prices.” But this solution only exacerbated the company’s sales problems.

Despite the company’s third quarter report, which indicated that the company’s current pricing regime had caused an even deeper sales decline, and Moody’s late November downgrade, which said much the same, the 110-year-old department store has decided to transform 700 of its 1,100 stores by 2015.

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According to J.C. Penny’s plan, developed by Chief Creative Officer Michael Fisher, each store will incorporate 100 brand-name fashion boutiques, ranging from Levi’s to Martha Stewart (NYSE:MSO). As Reuters reported, “Their strategy is to make Penney look like an upscale specialty store that still offers inexpensive wares, not a bazaar overflowing with ordinary merchandise and discount signs.”