Will $JCP Price Hike Gambit Pay Off?

Takeaway: JCPenney jacks up prices for bigger discounts later.

JCPenney hikes prices for bigger discounts later

 

Read more at the New York Post:

  • "JCPenney...is quietly jacking up prices on everything from jeans to kitchen appliances, a risky move designed to make room for steeper, more eye-catching discounts this year, sources told The Post."
  • "Chief Executive Mike Ullman...hatched the stealthy strategy this month with especially lofty markups in the jewelry department, sources said."

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Takeaway from Hedgeye Retail Analyst Brian McGough: The first step at JCPenney was getting things into the store that people actually want. Step two is raising prices to allow for discounting to protect gross margin. Actually, this makes sense. But the obvious risk here is that sticker shock will keep some customers away. We're going to give Mike Ullman the benefit of the doubt that he's managing this move appropriately. That said, we'd rather have someone else managing it.

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