J.P. Morgan Says Holiday Update Bodes Well for J.C. Penney

In a report published Wednesday, J.P. Morgan analyst Matthew R. Boss reiterated a Neutral rating on

. In the report, J.P. Morgan noted, “JCP provided a holiday update after the close reporting November same-store-sales of +10.1% - its best comp in 5 years (& sequential 2-year stacked acceleration). 3 Key Takes From the Release & Follow-up w Mgmt: (1) Traffic was positive over both the Black Friday weekend as well as Biggest Sale of Them All (11/6-11/11) with the cadence of the month more/less consistent, (2) Brick & Mortar comps improved ~1,000bps on our math with E-commerce consistent sequentially (+HSD in Nov vs -LSD in Oct), and (3) Category-specific: outerwear, accessories, boots and home decor (small electrics, pillows, sheets, towels) were standouts with the return of Cooks private brand (entry price points) well received over BF weekend. Importantly, November closes our outlined near-term catalyst trio (Oct SSS, 3Q EPS release, Nov SSS) included in our 'Santa's Rally' trading call” (published 11/4) and while the market has now digested a sense of stability (JCP +36% vs. SPX + 2.8% in Nov), the turnaround road remains steep (4Q heavily front-end loaded) with ‘a highly competitive environment' (cited in tonight's release) and continued constraints (home inventory/exclusive brands) pressuring margins ahead.” J.C. Penney closed on Tuesday at $10.11.