Wells Fargo Unimpressed by J. C. Penney (JCP) Nov Comps

December 4, 2013 8:37 AM EST
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Price: $6.76 --0%

Rating Summary:
    12 Buy, 15 Hold, 7 Sell

Rating Trend: = Flat

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    Up: 0 | Down: 0 | New: 0
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Wells Fargo maintained an Underperform ratting on J. C. Penney (NYSE: JCP) with a price target of $4-$5. Analyst Paul Lejuez was unimpressed by improved November comps, describing simple stack analysis as "misleading."

"JCP indicated November comps were +10.1% (and mgmt indicated Black Friday weekend was consistent with the month). This compares to Aug -9.8%, Sept -4.0%, Oct +0.9%. November results were consistent with our ests (and we maintain our FQ4 comp est of +7-9%). While FQ4 2012 comps declined 32%, Nov was the worst month of the qtr last year (we estimate -34%). Therefore, we believe the Nov comp may be as good as it gets in Q4 2013. Importantly, we believe many are likely to misread the magnitude of the acceleration in trend in Nov. Using "simple" stack analysis, it appears Nov accelerated by 700bps vs. FQ3. The "real" math shows it was only 230bps," said Lejuez.

"If we assume Nov last year declined 34%, many will add the 10% comp just reported and assume a 24% two-year stack for the month, an improvement over the simple FQ3 stack of down 31%. Some may point to a 700bps acceleration. When you multiply (the right way to do it) rather than add, the Nov two-year stack is down 27.3% compared to the real FQ3 stack of down 29.6%, only 230bps acceleration. Still an acceleration to be fair, but much less impressive in our view," he added.

For an analyst ratings summary and ratings history on J. C. Penney click here. For more ratings news on J. C. Penney click here.

Shares of J. C. Penney closed at $10.11 yesterday.

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