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J.C. Penney

J.C. Penney. Riley Coy Chris Wahl Jon Lambert. Agenda. Recommendation Industry Analysis Capital Analysis Financial Statement Analysis. New Pricing Strategy. Distinguish company More loyal, frequent customers “Everyday low prices” Apparel is 57% of Sales. Renovations.

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J.C. Penney

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  1. J.C. Penney Riley Coy Chris Wahl Jon Lambert

  2. Agenda Recommendation Industry Analysis Capital Analysis Financial Statement Analysis

  3. New Pricing Strategy • Distinguish company • More loyal, frequent customers • “Everyday low prices” • Apparel is 57% of Sales

  4. Renovations • Prototype store • Sales figures doubled • Project begins August this year • New merchandizing and marketing chief; VP of real estate, store design and development • Boutique shops offer pricing power • Sephora, MCG by Mango, Michael Graves, Jonathon Adler, Betsy Johnson

  5. Impact of Competitors • Department stores losing market share • Department stores expected 1.7%;retail- 3.4%

  6. Impact of Competitors (cont’d) • “The days of everyone offering the same-old, same-old thing are over…”- Customer Growth Partners • Martha Stewart Living • Lawsuit • Macy’s taking market share • JCP at 3%

  7. Beta

  8. WACC Cost of Debt: 7.41% Cost of Equity: 7.45% WACC: 5.67%

  9. NPV Average Total NPV: $7,334.02 Intrinsic Value: $3.40 Overvalued: 86.619%

  10. Financial Statement Analysis-Balance Sheet

  11. Financial Statement Analysis-Balance Sheet

  12. Financial Statement Analysis-Income Statement

  13. Financial Statement Analysis-Key Ratios as of 4/28/2012 ROA — (5.82%) ROI — (12.81%) Quick — .34 LTD to Equity — .73 Interest Coverage — 0

  14. Contact Jonathan.lambert@brooks.com Christopher.wahl@brooks.com Riley.coy@brooks.com

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