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Goldman Sachs See Greater Clearnance Margin on JCPenney

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In a report published Thursday, Goldman Sachs analyst Stephen Grambling cut the price target on J.C. Penney (NYSE: JCP) from $11.00 to $9.50 and maintained a neutral Rating.

J.C. Penney announced its plan to display more private label merchandise by reducing national branded inventory. The company is looking to shrink and move the Joe Fresh assortment brand to be replaced with A.N.A. and JCP women's wear brand. J.C. Penney will also eliminate JCP men's wear and, reduce Michael Graves inventory and replace Martha Stewart designed products with Liz Claiborne home goods.

Grambling commented, "we believe a greater emphasis on private label should help JCP recapture its traditional customer as well as drive gross margin back towards historical levels. However, the re-merchandising suggests incremental markdowns are likely to continue in the near term."

Goldman Sachs predicts that 20% of product will be on clearance compared with the original estimate of 15%. The analyst also reduced margin from 48% to 46%.

J.C. Penney closed at $8.26 on Thursday and shares have dropped 5.897% at $7.80.

Latest Ratings for JCP

DateFirmActionFromTo
Jan 2016Credit SuisseUpgradesUnderperformNeutral
Jan 2016CitigroupUpgradesNeutral
Dec 2015NomuraUpgradesReduceNeutral

View More Analyst Ratings for JCP
View the Latest Analyst Ratings

Posted-In: Goldman Sachs Stephen GramblingAnalyst Color Price Target Analyst Ratings

 

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