UPDATE: Vendors Aren't Concerned about Shipping to J. C. Penney (JCP) - Analyst
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Rating Summary:
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Up: 10 | Down: 7 | New: 9
Rating Summary:
1 Buy, 21 Hold, 11 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 10 | Down: 7 | New: 9
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(Updated - January 31, 2014 1:29 PM EST)
Venders aren't overly concerned about shipping to J. C. Penney (NYSE: JCP) in the near term, according to Buckingham Research analyst David Glick.
"From our conversations with vendors and industry checks, we don't believe vendors are overly concerned about shipping to JCP in the near term. While JCP "factors" represent only a single digit % of their orders, vendors do look to factors for guidance on how to evaluate JCP shipping risk. Our read is that factors and vendors are not concerned in the short term, but are looking at the next key period of "risk evaluation" as Oct./Nov. shipments (booked by retailers April-June). The feedback we are getting is that if JCP continues to show progress (e.g. comps and GM remain on improving trend in Q4 and Q1), Holiday 2014 shipments would not be an issue. Obviously if JCP's comps and GM do not show improvement, vendors and factors may need additional assurance (e.g. another capital raise) to keep shipping," said Glick.
Glick continues to believe J. C. Penney has ample liquidity for a turnaround, assuming it continues to show progress in sales and GM performance.
"For JCP to require additional liquidity, a downside scenario which we consider less likely but certainly possible, the company would have to post only a LSD% FY'14 comp (vs. our current estimate of HSD%) and GM of low-30s% (vs. our current estimate of ~35%). In that scenario, we believe JCP would need to fully tap their revolver and potentially raise additional capital to shore up liquidity. Additional asset-backed borrowing (i.e. accordian $400 mm, $250 mm sale leaseback option), sale of non-core assets (~$200-300 mm left), or another secondary equity offering could be viable options," concluded the analyst.
Buckingham Research has a Neutral rating on J. C. Penney with a price target of $8.00
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 $5.77 yesterday.
Venders aren't overly concerned about shipping to J. C. Penney (NYSE: JCP) in the near term, according to Buckingham Research analyst David Glick.
"From our conversations with vendors and industry checks, we don't believe vendors are overly concerned about shipping to JCP in the near term. While JCP "factors" represent only a single digit % of their orders, vendors do look to factors for guidance on how to evaluate JCP shipping risk. Our read is that factors and vendors are not concerned in the short term, but are looking at the next key period of "risk evaluation" as Oct./Nov. shipments (booked by retailers April-June). The feedback we are getting is that if JCP continues to show progress (e.g. comps and GM remain on improving trend in Q4 and Q1), Holiday 2014 shipments would not be an issue. Obviously if JCP's comps and GM do not show improvement, vendors and factors may need additional assurance (e.g. another capital raise) to keep shipping," said Glick.
Glick continues to believe J. C. Penney has ample liquidity for a turnaround, assuming it continues to show progress in sales and GM performance.
"For JCP to require additional liquidity, a downside scenario which we consider less likely but certainly possible, the company would have to post only a LSD% FY'14 comp (vs. our current estimate of HSD%) and GM of low-30s% (vs. our current estimate of ~35%). In that scenario, we believe JCP would need to fully tap their revolver and potentially raise additional capital to shore up liquidity. Additional asset-backed borrowing (i.e. accordian $400 mm, $250 mm sale leaseback option), sale of non-core assets (~$200-300 mm left), or another secondary equity offering could be viable options," concluded the analyst.
Buckingham Research has a Neutral rating on J. C. Penney with a price target of $8.00
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 $5.77 yesterday.
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