Why J.C. Penney is Worth $191 a Share
The Plano, TX-based retailer has been extremely inefficient, so Johnson and his new executive team have identified some $900 million in savings by 2012, of which $200 million could come from the company-owned headquarters and $300 million from advertising. The retailer's inefficient supply chain, capital allocation and inventory are other areas where J.C. Penney can save money, Ackman noted.
With 24% of J.C Penney's float held short, Ackman, who is J.C. Penney's largest shareholder with 18% of shares through his hedge fund Pershing Square, believes that 2012 could continue to be a challenging year for sales. Despite that, CEO Johnson has called J.C. Penney "the single best retail transformation" and Ackman believes that with the mall-within-a-mall concept, better product, and changes to the company's real estate operations, J.C. Penney could generate $6 in earnings per share by 2015.
Interested in more on J.C. Penney? See TheStreet Ratings' report card for this stock.
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--Written by Chris Ciaccia in New York
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