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Jan Rogers Kniffen

Jan Rogers Kniffen
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  • 'Surprising' Asset Quality? [View article]
    On October 3, 2008 I wrote a piece for my clients discussing the ridiculously high price for Sears stock. After looking at the operating company, the value of the brands, the value of the real estate and the debt load, I said the following:

    So, given the most optimistic numbers I can generate the company might be worth $25 per share as an operating retailer and maybe $30 per share as a real estate play. If those numbers were additive (and they are not) you could not get to the current stock price.

    Since then Eddie has sold some great assets and "burned" the cash. I suspect that by now Gary Balter's $20 per share is optimistic.
    Jul 3, 2015. 02:23 PM | 6 Likes Like |Link to Comment
  • What Will It Take To Get J.C. Penney Back At $15 Or More? [View article]
    And, don't call me Mays...Mays went bankrupt. May on the other hand had 25 years of up sales and up EPS with a 17% annualized return to share owners including reinvested dividends during my career. I credit David C Farrell with that, but I take partial credit:) The May/Mays confusion was the bane of my existence for about 20 years! Seriously, nice dissection of the above article, it truly is pretty bad. It is relatively easy to put together a good argument against Marvin succeeding with this old warhorse of a retailer, but this article was certainly not that. (I, personally, am still positive on Penney, and I still think $14 or $15 is a resonate target as Penney starts to deleverage. Most shorts believe that deleverage will never occur.) Next time I drive down Steamboat I will think of you:)
    Jun 14, 2015. 09:04 AM | 2 Likes Like |Link to Comment
  • What Will It Take To Get J.C. Penney Back At $15 Or More? [View article]
    RM You said pretty much everything that I wanted to say was wrong with this article, but I did not want to spend the time doing the research to correct an article that was so obviously "factually challenged". (You do have a typo in one of your dates, but that does not mean that you aren't right in the gist of your criticism.) Oh, and congrats on finding a paying patron for your work!
    Jun 13, 2015. 04:16 PM | Likes Like |Link to Comment
  • Why Another Equity Offering Makes Sense For J.C. Penney [View article]
    As a former SVP and treasurer of an S&P 500 retailer, I think that the odds of Ed Record (JCP CFO) deciding that the right course for the company and the stockholders is to issue debt probably approaches zero. And, barring a big downturn in the economy or some catastrophic event at Penney, I think that the odds of Penney not being able to roll its debt also approaches zero. Yes, Penney will gradually have to ramp up capital spending (gradually being the operative word here), but my guess is that they will also be closing many stores rather than putting capital into them. JCP looks more like a gradually delevering company based on improving cash flows rather than like an issuer of stock.
    May 14, 2015. 04:32 PM | 3 Likes Like |Link to Comment
  • ModernGraham Quarterly Valuation Of Nordstrom Inc. [View article]
    Thanks for the answer, but I do not think that a current ratio measure works across industries either when you are looking at healthy companies that have ready access on a contractual basis from a syndicate of major banks, as they all do. Current ratio may have been a relevant measure when Warren Buffet was sitting at Ben Graham's knee, but I do not see how it is today for the kind of public companies I described above. But differences of opinion is why we play the game!
    Apr 29, 2015. 01:06 PM | 1 Like Like |Link to Comment
  • ModernGraham Quarterly Valuation Of Nordstrom Inc. [View article]
    I ask this question every time I see a Modern Graham analysis of a retailer that I know well, and I never get an answer. Why does it make sense to look at the current ratio as an important measure when you are looking at a retailer with a solid debt rating and an iron clad credit agreement with a top rated bank group? Nordstrom is a company that benefits from controlling the current accounts on the balance sheet. The more business that they can do with the least inventory the better the earnings and ROI. All great retailers are minimizing the current ratio intentionally. The current ratio on these companies is not telling you anything about the health of the company, is it? Why don't you change your methodology?
    Apr 28, 2015. 04:22 PM | 1 Like Like |Link to Comment
  • Lilly Pulitzer Mess Shows What's Wrong At Target [View article]
    I do not disagree with the author. I only want to correct one comment. The glory days at Target did not end in the 1990s. The glory days at Target ended in 2006. It was not all that long ago that Target was great, it just SEEMS like it was a long time ago!
    Apr 28, 2015. 12:36 PM | Likes Like |Link to Comment
  • J.C. Penney: What To Do After Today's Massacre [View article]
    The following quote is excerpted from a report on JCP's 4Q results written by a top Wall Street Sell Side analyst. After I read it, I said, "Who would think that this paragraph could be reviewing the results of a retailer whose stock is down double digits on the news?" The market is an interesting animal!

    "Three positives out of the quarter: 1) Solid top-line: JCP delivered a +4.4% comp driven by +MSD transactions and roughly flat transaction value (higher average unit retail, lower units per transaction). January was the strongest month and management noted February is running above +MSD plan (we estimate +6-7%). Non-clearance merchandise comped +8.7% during the quarter; 2) Normalized clearance: JCP delivered a 33.8% GM, +540 bps y/y, which was driven by less clearance selling as well as a positive clearance margin for the first time in two years; and 3) Inventory: The sales-to-inventory spread was +12.6%, and inventory declined 9.6% y/y. JCP worked down inventory throughout the year as expected. "
    Feb 27, 2015. 10:25 AM | 5 Likes Like |Link to Comment
  • ModernGraham Annual Valuation Of Macy's Inc. [View article]
    Among other things, I taught finance to graduate students for many years. One of the projects I would assign was a financial analysis including a stock recommendation on a publicly traded company. The night we began, I would say, "if anyone tells me that there is a problem with a Fortune 500 company who has a strong long term credit rating and an iron clad credit facility because of a poor current ratio, I will fail him or her on the paper...write that down..." Unfortunately, you just failed. (Remember, there are whole groups of people at every major retailer trying to do ever more business with ever less working capital in order to improve ROI. Healthy companies with intentionally low current ratios, are healthy companies improving their return to the investors...not companies going broke.)
    Feb 13, 2015. 03:01 PM | 1 Like Like |Link to Comment
  • Was Acquiring Stuart Weitzman A Bad Move For Coach? [View article]
    C'mon folks, there is no idle cash here. The company is, in fact, going to borrow money to do this, and they said so in the announcement. Second, having done a few acquisitions in my time...Associated Dry Goods, Foley's, Filene's, Strawbridges, ZCMI, and Marshall Fields, only to name a few, I am telling you that the method of purchasing a company by an entity with plenty of uses for cash, equity, and capital, in general, from paying down debt, paying out dividends and repurchasing stock, not to count capital spending, does not make the deal cheaper for the shareholder. Beyond that, Coach had to outbid Brown Shoe, the natural strategic buyer, to get the deal. That is almost prima facie evidence that they "over paid." And, they are doing this deal at a time when the turnaround, if it ever happens, is far from accomplished. Coach may be the US equivalent of LVMH someday as they roll up aspirational brands like LVMH did with designer brands, but they have to fix Coach first. I like what Stuart Vevers has done with design, and I like that Coach is taking the hits necessary to rebuild the business. I still have a hard time arguing that SW at this time at this price is a good idea.
    Jan 27, 2015. 09:54 AM | 1 Like Like |Link to Comment
  • Was Acquiring Stuart Weitzman A Bad Move For Coach? [View article]
    "Coach can subsume Stuart Weitzman without incurring any debt which in turn makes the target company an asset at minimal cost therein."

    Let's be accurate about one thing here. The fact that a company does not have to borrow to acquire an asset does not make the asset cheaper. That bullet point in the opening of the article caused me to skip the rest of the analysis. "Subsume" and "therein" were a bit off putting as well.
    Jan 23, 2015. 04:26 PM | Likes Like |Link to Comment
  • Update: J.C. Penney Announces Another Round Of Store Closures [View article]
    Actually, a closure of 300 stores is not unrealistic. JCP did 33 last year and 40 this year. As they say 70 here, 70 there, pretty soon you have 300 closed. My guess is that the new CEO will be much more aggressive on getting rid of "bad" stores than Mike has been, and Mike has actually announced 70 on his watch. A total of 300 over the next couple of years including the 70 or so already announced is certainly not out of the realm of the possible. On the other hand, a merger with Kohl's seems totally unrealistic. Kohl's runs a "junior" department store format in 89,000 square feet with only the "high turn" components of a department store business. Penney is a fill line department store in a mall based format, Kohl's is off mall almost exclusively. Kohl's has one of the best credit ratings in retail with low leverage, a dividend, and stock buybacks...hardly the Penney story today. No way a merger happens with KSS. It would be more likely for KSS to elect to go private than to merge with JCP.
    Jan 11, 2015. 03:22 PM | Likes Like |Link to Comment
  • Why J.C. Penney's Strong Comps Aren't Yet A Game Changer For The Stock [View article]
    While this article makes a lot of good points, in the last paragraph it raises the specter of bankruptcy again. The odds of a J C Penney bankruptcy have dropped every quarter since Ron Johnson walked out the door. It looks like Penney could go cash flow neutral or cash flow positive in 2015. If so, the odds of bankruptcy will once again drop dramatically. That should make both the bonds and the stock much more attractive to investors.
    Jan 8, 2015. 04:15 PM | 3 Likes Like |Link to Comment
  • Is Macy's Setting Shareholders Up For Disappointment This Winter? [View article]
    Macy is the best "omnichannel" retailer in the US today, and well ahead of the pack. The author complains about Macy investing in brick and mortar locations, but clearly investing in existing brick and mortar, like 34th Street, when it is working makes sense. Macy is not generally building new stores, and has been closing about 10 stores a year as it becomes more of an online player, so new store investment is pretty much non existent. The "new store" investment is all going to online. Macy is also the "go to" place for gift giving, and the consumer has been telling us for months that the one place that he/she expects to spend more this year is on "gifts for others." And, despite the author's comments regarding Black Friday, November was a very good month for retail. Macy will have a very strong 4Q. Oh, and one other rather unimportant note, the author should talk to a good accountant about how EPS calculations work in companies who buy back stock...the quarters do not necessarily add up to the year.
    Dec 15, 2014. 01:00 PM | 1 Like Like |Link to Comment
  • This J.C. Penney Turnaround Simply Isn't Working [View article]
    While I have been, and am currently, a JCP fan, this comment only applies to the holiday season for big box, omnichannel retailers (like JCP) not JCP in particular. November was a very good month. Black Friday was not down 11%, NRF's opinion notwithstanding, and December is off to a very good start. This will be the best fourth quarter for discretionary retail in a very long time. Amazing what being up against the worst weather in 50 years, a huge drop in gasoline prices, and more people working will do for retail.
    Dec 9, 2014. 05:27 PM | 2 Likes Like |Link to Comment
COMMENTS STATS
59 Comments
137 Likes