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J.C. Penney Presentation
Transcript of J.C. Penney Presentation
Opened the first J.C. Penney store in a partnership with Guy Johnson and Thomas Callahan
Originally called The Golden Rule
The store opened in 1902 in Kemmerer, Wyoming
James Cash Penney took full ownership in 1907
All stores were given the JC Penney name in 1913
In 1940, Sam Walton began working at a J. C. Penney in Des Moines, Iowa Company History Company Information Corporate headquarters are located in Plano, TX
1,106 stores in 49 states and Puerto Rico
Products offered: Clothing, footwear, furniture, jewelry, beauty products, electronics, and housewares
Became an internet retailer in 1998
Most J.C. Penney stores are located in shopping malls
CEO: Mike Ullman Mission Statement "Focused on making the customer experience better every day, J.C. Penney is dreaming up new ways to make customers love shopping again. On every visit, customers will discover great prices every day in a unique Shops environment that features exceptionally curated merchandise, a dynamic presentation and unmatched customer service." Vision Statement "JCPenney is executing a strategic Long Range Plan that consists of four integrated strategies aimed at building a deeper, more enduring relationship with our customers, increasing the engagement and retention of our Associates, and delivering industry leading financial performance to our shareholders." Financial Snapshot
Revenue - 17.2 Billion (2012)
Operating Income - (2 Million) (2012)
Net Income (Loss) - (152 Million) (2012)
Total Assets - 11.4 Billion (2012)
Total Equity - 4.01 Billion (2012)
Market Cap - 3.31 Billion
ROE - -27.43% Mission Orientation Firm's Current Strategy He has somewhat of a logical plan in terms of focusing on the customer and re-establishing the connection,” Boss said in an interview.
“The connection was broken between having the right merchandise and the right price. He talked about fixing that value perception. The customer needs to believe they are getting the best value. EDLP (Every day low price) isn’t accomplishing that.”
Ullman will go back to the company’s traditional “high-low” pricing
Ullman will also put a pause to the 100 planned in-store shops that Ron Johnson had planned
-Mike Ullman's plan after being rehired Macro-environment Sociocultural Legal/Political/Regulatory Technological Economic Industry Analysis Unit of Analysis Porter Five Force Buyer Bargain Power
Moderate to high Supplier Bargaining Power
High Threat of New Entrants
Moderate to low Threat of Substitutes
High Shopping online like Amazon and any other up and coming online retailer
Huge threat to J.C. Penney
People use department store showrooms to compare items Competition Among Rivals
High Summary of Porters Five Force Key Economic Indicators External Factor Evaluation Competitive Profile Matrix Three Main Competitors J.C. Penney is stuck in between their major competitors
Too high to compete with low end retailers (Wal-Mart, Kohl's, and Target)
Too low to compete with high end retailers (Macy's, Nordstram, and Dillards) Most department stores have a long history
They found ways to thrive even during tough times
"Mom and pop" stores are becoming obsolete unless they sell through online retailers Economic Calendar GDP
Productivity & Cost
Consumer Credit Demographics and pyschographics
Woman, specifically mothers and middle-aged woman
Sells quality products that used to be priced high at a low price Court cases over what brands they can sell in their stores
Martha Stewart Brand court case Shrinking middle class
Lower disposable income creates less consumer spending Many retailers have moved towards investing into online retail
Trend toward using social networks to promote brand and sell merchandise GDP and PPI Personal Income
Credit & Retail Sales Industry Analysis Who JCP competes with (low-end, high end stores) varies but overall the consumer switching costs are fairly low
Buyer bargaining power depends on where the consumer is switching
JCP competes with both high-end and low-end retailers Core Competence Low Pricing Strategy Distinctive Competence Sephora shops customer service Competitive Advantage Sephora Stores Value Chain Analysis Internal Factor Evaluation Liquidity Ratios Current Ratio= Current Assets / Current Liabilities A liquidity ratio that measures a company's ability to pay short-term obligations. Liquidity Ratios Suppliers for the departmental retail industry generally have very little bargaining power.
However, industry majors such as Stein Mart, J. C. Penney, and Dillard’s carry exclusive brands at their stores.
This causes the bargaining power of these suppliers to be higher than those providing them with just the basic general merchandise they carry. Cash Ratio= Cash & Cash Equivalents / Current Liabilities The ratio of a company's total cash and cash equivalents to its current liabilities. It can therefore determine if, and how quickly, the company can repay its short-term debt. A strong cash ratio is useful to creditors when deciding how much debt, if any, they would be willing to extend to the asking party. Leverage Ratios The department store industry is extremely competitive. Presentation Prepared by Justin Norkaitis, Adam Siebert, Vasille Tivadar, Garret Reich & Jed Stazyn Debt to Equity Ratio= Total Debt / Stockholder's Equity A measure of a company's financial leverage calculated by dividing its total liabilities by stockholders' equity. It indicates what proportion of equity and debt the company is using to finance its assets Leverage Ratios Debt to Assets Ratio= Total Debt / Total Assets A metric used to measure a company's financial risk by determining how much of the company's assets have been financed by debt. Calculated by adding short-term and long-term debt and then dividing by the company's total assets. Activity Ratios Inventory Turnover= Cost of Goods Sold/ Average Inventory A ratio showing how many times a company's inventory is sold and replaced over a period. The days in the period can then be divided by the inventory turnover formula to calculate the days it takes to sell the inventory on hand or "inventory turnover days." Activity Ratios Finished goods inventory is a measure of finished goods on hand at the end of the period. Profitability Ratios Gross Profit Margin= (Revenue - Cost of goods sold)/ Revenue A financial metric used to assess a firm's financial health by revealing the proportion of money left over from revenues after accounting for the cost of goods sold. Gross profit margin serves as the source for paying additional expenses and future savings. Profitability Ratios Operating Profit Margin= Operating Income/ Net Sales Operating margin is a measurement of what proportion of a company's revenue is left over after paying for variable costs of production such as wages, raw materials, etc. A healthy operating margin is required for a company to be able to pay for its fixed costs, such as interest on debt. Profitability Ratios Integrity - We act only with the highest ethical standards.
Performance - We provide coaching and feedback to perform at the highest level.
Recognition - We celebrate the achievements of others.
Teamwork - We win together through leadership, collaboration, open and honest communication, and respect.
Quality - We strive for excellence in our work, products, and services.
Innovation - We encourage creative thinking and intelligent risk taking.
Community - We care about and are involved in our communities. Return on Stockholder's Equity= Net Income/ Stockholder's Equity The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested. Profitability Ratios Earnings per share= (Net Income - Dividends for preferred stock) / Average Outstanding Shares The portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serves as an indicator of a company's profitability. SWOT Analysis Strategy Selection Increased advertizing to take advantage of the trend in social network. Table of Contents Background, Mission Statement, Vision Statement
Industry Analysis (Porter Five Forces)
External Factor Evaluation
Competitive Profile Matrix
Internal Audit (Core Competence)
Value Chain Analysis
Internal Factor Evaluation
SWOT Matrix to Form Strategies