J.C. Penney Hits 2-1/2 Year High
CHICAGO (Reuters) - Shares of retailer J.C. Penney Co.
(NYSE:JCP - news) zoomed to their highest level in about 2-1/2 years
on Tuesday, boosted by growing optimism on Wall Street about the
health of the company.
Earlier today, Lehman Brothers analyst Jeffrey Feiner raised his
investment rating on the No. 5 U.S. retailer to a strong buy from buy,
while another analyst also issued some positive comments on Plano,
Texas-based Penney. The retailer has catalog and department store
operations along with the Eckerd drugstore chain.
Shares of Penney rose $2.17, or more than 10 percent, to $22.85 in early afternoon trade on the
New York Stock Exchange (news - web sites). Earlier in the trading session the stock touched a level
not seen since November 1999, when it climbed to $22.90.
``While there is a lot going on at J.C. Penney under the leadership of the relatively new CEO Allen
Questrom, we believe the central near-term catalyst for the shares is the Eckerd Drug division, which
we conservatively believe is worth $25 per share,'' Feiner wrote in a research note.
To shore up operations at Eckerd, Penney is remodeling some of its stores, cutting prices on some
items to generate customer traffic and changing its merchandise mix to cater to regional tastes.
``One of our first pieces of action is to get Eckerd to be a great working company and it is certainly
headed in that direction,'' Rita Trevino Flynn, a Penney spokeswoman, said.
Feiner also noted improvement in the company's department store division. Penney, which has lost
market share to discounters like Wal-Mart Stores Inc. (NYSE:WMT - news) and Kohl's Corp.
(NYSE:KSS - news), has seen its same-store sales tick higher in recent months despite a slowing
U.S. economy, which has curtailed consumer spending.
``For the first time in many years, we believe that J.C. Penney has the potential to improve its
operating performance significantly,'' Bernard Sosnick, retail analyst at Fahnestock, wrote in a
research note.
Sosnick noted recent improvement in Penney's women's apparel sales, and said the company had a
substantial opportunity in the plus-size clothing category. |
