Ahead of the Bell: JC Penney the comeback kid?
By the Associated Press
NEW YORK (AP) — J.C. Penney's stock has bounced back sharply from an all-time low just over a month ago and its campaign to reverse devastating losses appears to be gaining traction.
Wall Street is starting to take note as shoppers return to its stores.
Shares rose 8 percent before the opening bell Tuesday and they are up more than 70 percent since early February, when the stock slumped below $5 for the first time in the company's 112-year history.
Citigroup upgraded the company Tuesday, saying that the strategy of returning to what J.C. Penney does best is paying off.
Earlier this month Standard & Poor's Ratings Services raised its outlook on retailer's credit after it posted the first uptick in comparable-store sales in two years.
J.C. Penney has been attempting to recover from a botched overhaul by one-time Apple executive Ron Johnson. Longtime customers were alienated by the jettisoning of cherished brands as the retailer tried to polish and update its image.
The shift turned into massive losses and plunging sales at J.C. Penney stores.
Johnson was ousted last April after 17 months on the job and the board rehired Mike Ullman, who had been J.C. Penney's CEO for seven years.
Ullman has restored the sales promotions and the merchandise that the company ditched under Johnson in its bid to lure younger, wealthier consumers.
On Tuesday, Citi analyst Oliver Chen lifted J.C. Penney Co.'s rating to "Buy" from "Neutral" and increased its price target to $11 from $7.50.
Chen believes Penney's comparable-store sales will continue to improve as it restocks basic items and private branded products, phases out unsuccessful merchandise and revamps its products for the home.
Analysts pay close attention to comparable-store sales, locations that have been open for at least a year, because it strips away the volatility of stores recently opened or closed and provides a better picture of a retailer's health.
While a rebound is still nascent, Chen likes the risk/reward in Penney's stock because he sees the changes supporting sales growth going forward.
Shares of J.C. Penney, based in Plano, Texas, gained 70 cents to $9.12 before the market open.