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J.C. Penney Corporation, Inc.: Reinventing Retail

J.C. Penney Corporation, Inc.: Reinventing Retail. Joel Soo Shi Yi Wong Jun An Pang Chin Yew Kok. Qualitative Analysis. Pricing & Promotions. Misinterpreted what the consumers really want “We did not realize how deep some of the customers were into [coupons],” said Kramer ( Bhasin , 2012 )

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J.C. Penney Corporation, Inc.: Reinventing Retail

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  1. J.C. Penney Corporation, Inc.:Reinventing Retail Joel Soo Shi Yi Wong Jun An Pang Chin Yew Kok

  2. Qualitative Analysis

  3. Pricing & Promotions • Misinterpreted what the consumers really want • “We did not realize how deep some of the customers were into [coupons],” said Kramer (Bhasin, 2012) • Complicated sales strategy • Does not focus on the wants and needs of loyal customers

  4. Remodeling Plans • Misunderstood preferences of customer • Assuming what works for Apple, works for JCP too • Alternative strategies: • More value to loyal customers • Online sales • Redesign products

  5. Industry and Competitors • Lose market share! • Pricing Strategy • Undifferentiated Product • Period of Remodeling • Lose customers • Competitors can learn

  6. Quantitative Analysis

  7. Cost of Capital

  8. Cost of Debt • Financial Statement • Observe the interest paid on debts • 7.1%

  9. Cost of Equity • Capital Asset Pricing Model (CAPM)

  10. Cost of Capital • β approximately 1.825 • Risk free rate = 1.70% • Market risk assumed 10.30% • Cost Of Equity = 17.395%

  11. Cost of Capital • Debt to value ratio • Equity to value ratio • WACC = 9.10%

  12. Cost of Capital • Project Risk Higher • Adjusted • WACC= 10%

  13. Capital Budgeting Analysis

  14. DuPont Analysis

  15. ROA and ROE trend over time

  16. Thank You!

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