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Jan Rogers Kniffen

Jan Rogers Kniffen
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  • 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
  • Update: Macy's Earnings Impress Some, But Not Us [View article]
    Since they are starting from the $7 range they do not have to get to my $14 number to be a buy. I believe that they will have a good Q4, and that the good performance will continue into 1H 2015. And, that only has to get them back to the 10 to 11 range where they were already trading for the stock to be attractive. There are very smart people who believe that JCP is trading at twice what it is worth, and there are other very smart people who think it is trading at half of what it is worth. That makes for a very interesting stock.
    Nov 18, 2014. 08:15 AM | 1 Like Like |Link to Comment
  • Update: Macy's Earnings Impress Some, But Not Us [View article]
    Gator makes some good points, but here is the other side. It is not true that Macy wanted to have fewer than 800 stores but was constrained by the real estate market. Macy completed the May merger in 2005 and promptly closed and sold 80 locations that they did not intend to operate. Those stores were sold at about $60 per square foot, and the transactions were completed before the commercial real estate crash in 2008. If Macy had wanted to close and sell more locations it could have. And, there was never a time when Macy had more clout with mall developers and operators. Selling store locations to the existing mall owners was certainly an option at that time.

    The comment that many smaller stores are in disadvantaged non mall locations is also questionable. I think I can count Macy non mall locations that could be described as disadvantaged on one hand.

    And, even the claim that the merger put the stores "too close" together is questionable. Since Macy closed and divested virtually all of the overlaps in the three years following the merger, and since many markets acquired, like St. Louis, Pittsburgh, Denver, and Chicago had no major Macy presence before the merger, there is very little "too close together" in the 2014 portfolio.

    And, what about the "there are quite a few shopping malls where only the anchors are open" claim? Well, of the approximately 1100 regional and super regional malls in the US there were 78 zombies at the end of 2014, meaning occupancy was below 50%. To my knowledge there were zero where anchors were open and the GLA was uninhabited. But, in any event, Macy's 800 stores are pretty much limited to the 800 top malls in the country, not the 300 malls at the bottom where the zombies and the about to be zombies exist. Sears and Penney, do inhabit those 300, but a Macy stuck there is rare.

    Diversity of the customer base is as mentioned by gator an issue, but the My Macy program is dealing with that better than anyone has ever dealt with it in the broad line department store space. While the strategy of gearing the store to the demographics of the neighborhood may cause occasional cognitive dissonance to a shopper who expects something different, over all it has resulted in better sales and happier shoppers, and fewer markdowns.

    Regarding Internet sales and returns, Macy and Nordstrom are arguably the best omnichannel retailers in the US having perfected selling to desk top, tablet and mobile devices, allowing Buy Online, Pick Up in Store (BOPIS), global inventory (so that no matter where it is in the system it can be used for online fulfillment), and, yes, return to store. But, contrary to what gator has said, Macy wants the customer to return Inet sales to the store, since they buy when they are returning. If they could get 100% of Inet returns to be in store, they would be thrilled.

    And, Macy's ability to continue to deliver 40% gross margins in the face of ever more competition tells me that the "diversity of income" has not caused much, if any, need for greater markdowns. What causes the need for greater markdowns is competition, and every retailer is experiencing that.

    Retailing, is, in fact, an ever tougher world in which to make a buck, but Macy has been out in front on technology, online, global inventory, improved customer service, and bottom line profitability. And, they are doing it in a retail space that has seen about 145 other department store names disappear since I started following the space. I think gator should cut Terry and the gang some slack. The returns since the merger have been stellar. The company has a fortress balance sheet and can buy back stock and pay a healthy dividend and still invest in technology to be a leader. Gator sees what I see and thinks the glass is half empty...I think it is half...maybe three quarters...full.
    Nov 16, 2014. 12:22 PM | 3 Likes Like |Link to Comment
  • Update: Macy's Earnings Impress Some, But Not Us [View article]
    Let's see, there are two million more people working year over year and the lowest level of unemployment claims in the US in 14 years, slightly (very slightly) positive wage growth, probably a better weather compare (last year was the worst selling weather for the holiday season in 50 years), a slightly longer selling season (one extra day), a good placement of the holiday (mid week, not a weekend), better inventory levels coming out of 3Q, no input price pressure (cotton falling like a stone and a stronger dollar holding down "real" wage increases in Asia), no real issues hiring sales help in the US, the best consumer confidence number in years, and...drum roll...$40 billion...no, $50 billion...no, $60 billion...wait, late breaking news, $61 billion as of 5 pm today in the consumer's pocket from falling gas prices in the retailers' Q4, and there is a close correlation between stock market appreciation and holiday sales. So, you do not want to own the company that owns holiday gift giving and is the best omnichannel retailer in the country? I think you are making a mistake.


    Nov 16, 2014. 03:15 AM | 2 Likes Like |Link to Comment
  • Wal-Mart Ends Its Streak For The 'Wrong' Reason [View article]
    I think that you nailed it...but positive comps still beat negative comps:)
    Nov 13, 2014. 05:17 PM | Likes Like |Link to Comment
  • Sears Gets Creative [View article]
    Aventura is, indeed, a great idea, but it still requires a very substantial investment to go from the old, dumb Sears box to the new, cool experiential space. Putting Primark in half a dozen Sears stores, and leasing half of the Sears store at King of Prussia Mall to Dick's and the other half to Primark is a great deal for Sears and for Dicks and for Primark. I like the creativity. Spinning off Lands' End was good for Lands' End and for Sears. But, almost all of the Sears locations and almost all of the Kmart locations cannot be "reconstituted." Eddie is a really smart guy, but if he really figures out how to make the dog's dish that is Sears/Kmart work across the portfolio...I will run naked down Wall Street...on a trading day...at high noon...
    Nov 13, 2014. 04:38 PM | 1 Like Like |Link to Comment
  • Sears Holdings: Assessing The Impact Of The Store Closures [View article]
    Damn, now that is really funny, no mater what your view of Eddie and Sears happens to be!
    Oct 28, 2014. 05:35 PM | Likes Like |Link to Comment
  • J.C. Penney: Valuation Has Settled Into A Reasonable Range [View article]
    I think describing a guy (Ellison) who spent half of his career at Target as having no experience with apparel is just wrong. The overlap in Target and Penney product is relatively high in apparel, soft home, pots and pans, jewelry and accessories, as well as seasonal goods like holiday trim a tree. His background is a good one for Penney.
    Oct 20, 2014. 07:35 AM | 3 Likes Like |Link to Comment
  • Update: J. C. Penney's New CEO Announcement Is Window Dressing [View article]
    Actually, RJ also brought in the Disney shop, which has been incredibly successful, as well as IZOD, also very successful. (All of RJ's ideas were not bad...just most of them:) Mike brought in Sephora as the first "shop in shop" as you pointed out, and it has been the most successful introduction of product ever at JCP. Mike also "bought" and brought in Liz Claiborne which has done amazingly well. (He also brought in American Living, which was a flop...you cannot win them all.) But, right now the merchandising is getting better with every delivery.
    Oct 18, 2014. 04:27 PM | Likes Like |Link to Comment
  • J.C. Penney: How Pennies Make Dollars - Part 2 [View article]
    I think you have covered all the basis here, and I basically am in agreement with what you have written. And, yes, I think JCP is a great opportunity since it got "whacked" (technical term) as a result of the analyst meeting. I, like you, am a big fan of the management team and the hire of Marvin Ellison. For future reference (and I do not think that this has all that much effect on your valuation work) no anchor in the history of mall based retailing has ever gotten a 70% transfer of sales when another anchor went dark. No one hits a number above 40%, there is just too much diffusion. Great work, though, I loved the article.
    Oct 18, 2014. 04:16 PM | 5 Likes Like |Link to Comment
  • J.C. Penney: It Ain't Love, But It Ain't Bad [View article]
    I have to say that I love this article. It is realistic and on point. I think department store retail spending in general is going to be good in October, November and December, so I am optimistic on the performance of JCP over that period. (Consumer confidence is at a multiyear high, energy costs, especially gasoline are adding a lot of spending power for the consumer. $3.20 gas would add 30 billion dollars in Q4 to consumer spending on a base of about 620 billion dollars.) And, yes, I think JCP is a buy at the current price. Nice job on the analysis. It is realistic and balanced.
    Oct 17, 2014. 10:03 PM | Likes Like |Link to Comment
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