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3 Defining Parameters of J. C. Penney’s (JCP) Strength


Investor sentiment is often swayed by breaking news and headlines, keeping the stock market in its thrall. One stock which has gained despite the economic volatility is J. C. Penney Company, Inc. JCP. Its shares have surged more than 47% year-to-date. Keep reading to find out which three factors are driving the stock higher.

Strategic Initiatives Bode Well

In an effort to enhance customer shopping experience the company has taken up several strategic initiatives to drive traffic. The endeavors includes focusing on remodeling, renovating and refurbishing its stores with special attention to enhancing high-margin center core department that houses handbags, fashion accessories, sunglasses and fashion jewelry. Moreover, we believe J. C. Penney’s efforts to further the reach of national and especially private-label brands, through effective marketing campaigns and point-of-sale technology initiatives, should help in improving gross margins.



Omni-channel Efforts

J. C. Penney is focusing on bolstering its Omni-channel presence. A robust online portal will aid the company to draw more customers as shoppers prefer online shopping. Incidentally, the company also launched a new mobile app in the second quarter of fiscal 2016. To drive more traffic online, it has been testing options like online retailing, pick up in store same day facility in several markets. The company intends to extend this facility to the entire store network.

Sephora A Bright Spot

The in-store Sephora departments continue to outperform by drawing more customers. During second-quarter fiscal 2016, the company opened 27 Sephora stores, thereby taking the total count of Sephora locations inside J. C. Penney to 574 stores. Prior to that, the company also celebrated 10 years of Sephora inside J. C. Penney with the mega opening of 60 new Sephora stores at new locations. These shops are part of J. C. Penney's strategy to gain competitive advantage over other beauty product retailers and drugstores, which have significantly enhanced their cosmetics sections in recent years. Since Sephora is part of J. C. Penney’s long-term growth strategy, the company not only intends to add more stores but has also started selling Sephora products online. Notably, the company plans to open four Sephora locations in the latter half of fall 2016.

The aforementioned factors clearly define J. C. Penney’s inner strength and sound fundamentals, which are duly exhibited by the company’s Zacks Rank #2 (Buy). Additionally, the stock has a long-term earnings growth rate of 16% and a VGM Score of “A”.

Other Stocks to Consider

Other stocks which warrant a look in the retail sector include Macy's, Inc. M, Big Lots Inc. BIG and Burlington Stores, Inc. BURL. All these stocks hold the same rank as J.C Penney. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

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