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To this end, eight boutiques have been set up in stores, leaving approximately 89 percent of sales space designated for the “Old J.C. Penney.” In order to halt falling sales until more boutiques have been introduced, Fisher has included an army of mannequins to bring customer attention to the company’s old-style retail space. While seemingly traditional, the mannequins illustrate more clearly what the retailer has to offer.
“Customers don’t know what to buy. They love a mannequin that shows you how to put the outfit together,” Fisher told Reuters last week. “We find anything we put on a mannequin sells out.”
However, as Reuters noted in a recent article, the strategy could work against the retailer, as the boutique-style may alienate Penney’s discount-seeking customers. Trutina Financial’s chief investment officer Patty Edwards said that the company may be going too far with its “Apple-esque” design.
Both Fisher and Johnson were once Apple executives, and Apple has the most profitable floor space of any top company in the United States, drawing in $6,060 in annual sales per square foot. J.C. Penney’s new executives are attempting to recreate the concept of the Apple store within the retailer’s boutiques to make its sales space more profitable. Compared to the company’s traditional retail store sales, boutiques have doubled the sales per square foot. But the boutiques still generate lower sales than other retail stores. For example, boutique sales amount to $269 per square foot compared to $391 at Gap.
J.C. Penny released dismal third quarter results on November 9, Moody’s downgraded the company’s stock three levels on November 20, and the company’s shares have fallen more 50 percent this year. Given these figures, J.C. Penney’s stock appears unattractive. Furthermore, the stock is trading just below its 10-day, 20-day, and 100-day moving average, and in last month it received downgrades from both JPMorgan and Credit Suisse.
However, the retailer has only launched 8 of its 100 planned boutiques, and already sales in boutique floor space have doubled.
Over the short-term the retailer may be a sell, but J.C. Penny looks like a long-term WAIT AND SEE based on the key metrics above.
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