J.C. Penney Company, Inc. (JCP): The Supreme Discounter

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J.C. Penney Company, Inc. (NYSE:JCP)J.C. Penney Company, Inc. (NYSE:JCP) has been widely discussed recently for the ousting of CEO, Ron Johnson. Johnson tried to reinvent the historical retailer and did away with two of it’s best known strategies, sales prices and coupons. Unfortunately for Johnson, customers did not share his vision, and J.C. Penney Company, Inc. (NYSE:JCP) suffered greatly.

Two retailers that have embraced these strategies have been enjoying the increasing health of the U.S. economy. Jos. A. Bank Clothiers Inc (NASDAQ:JOSB) consistently utilizes sale pricing to fuel retail growth. Bed Bath & Beyond Inc. (NASDAQ:BBBY) has utilized coupons to continue to grow sales.

The supreme discounter

Jos. A. Bank Clothiers Inc (NASDAQ:JOSB) designs, manufactures, retails, and direct markets men’s tailored and casual clothing and accessories in the United States. The company operates 603 stores throughout the U.S. and has a strong catalog and internet business. The company employs a “high-low” pricing strategy based on customer preferences and demands. As part of the strategy, the company periodically promotes specific items or categories at prices that are below the retail price normally offered to consumers. If you’re familiar with this retailer, you know that whole store is, more or less, always on sale. The company continuously offers some type of discount to incentivize customer purchases. Sales prices are essentially synonymous with the retail experience at Jos. A. Bank Clothiers Inc (NASDAQ:JOSB).

By embracing this pricing strategy, the company has enjoyed financial success and significant growth opportunities. The company has opened 189 new stores over the past five years and plans to open 40 to 45 new stores in fiscal year 2013. The company believes that is can increase its total store count by 33% to approximately 800 stores.

The company currently trades at a P/E of 15.11, versus the specialty retail industry average of 18.99. Price/sales ratio is 0.85, versus an industry average of 1.4. Most impressively, gross margins currently stand at 58.09%, versus an industry average of 34.79%.

The company’s future growth opportunities, strong financial metrics, and reasonable valuation make Jos. A. Bank Clothiers Inc (NASDAQ:JOSB) an interesting investment opportunity in the retail space.

The coupon king

Bed Bath & Beyond Inc. (NASDAQ:BBBY) operates a chain of retail stores that sell a range of domestic merchandise. The company operates stores under the Bed Bath & Beyond Inc. (NASDAQ:BBBY), Christmas Tree Shops, Harmon and Harmon Face Values, buybuy BABY, and Wold Market names. The company has 1,471 stores throughout the Unites States, Puerto Rico, and Canada.

If you have a mailbox, you have likely received your fair share of letter-sized blue paper offering you 20% off one item at Bed Bath & Beyond Inc. (NASDAQ:BBBY). These coupons can be used on the vast majority of items in the stores and are an effective tool in driving revenue and foot traffic to the store.



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