8/13/2019 JCP_StoreClosure_CompetitorNote

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JCP Store Closure Competitor Analysis1/16/2014

Companies mentioned:

J.C. Penneys (JCP) - $7.01

Why Read?

Yesterday, J.C. Penneys announced 33 store closures and the elimination of 2,000 employees. Theseclosures, according to the company, will result in $65 million in annual cost savings beginning in 2014and result in a pre-tax charge of $26 million in 4Q13 and $17 million in future quarters.

Lets go ahead and see who drove JCP out and who stands to gain the most share from these storeclosures.

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Our main takeaway is JCP is pulling back from direct competition against Sears. Of the 33 storesclosed, 52% had at least one direct competitor in the same shopping center. It is also worth noting thatmany of these closures are in small markets, two of which Sears itself recently closed stores in.

Additionally, inventory from the closed stores will be sold off until May 2014, so expect management

to use this as an excuse for any gross margin weakness in 1Q14.

(Appendix on next page)

8/13/2019 JCP_StoreClosure_CompetitorNote

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