Disney and J.C. Penney Join Forces

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Shareholders of Disney (NYSE: DIS  ) have reason to cheer today. While the entertainment company's stock is marginally lower in intraday trading, down approximately nine basis points, it was the top stock yesterday on the Dow Jones Industrial Average (INDEX: ^DJI  ) , up well over 1%.

Why the move?
The uptick was tied to a report in Women's Wear Daily that the company will partner with J.C. Penney (NYSE: JCP  ) to open more than 500 in-store boutiques featuring Disney products designed exclusively for the retail giant. According to one account, "The Disney shops will average 750 sq. ft. to 1,100 sq. ft. and sell costumes, plush toys, figurines, footwear, sleepwear, underwear, backpacks, lunch totes and apparel for boys, girls and babies."

In response to the news, Swiss bank Credit Suisse raised its price target on Disney to $58 a share from $56. It currently trades for $52.66.

The partnership is part of J.C. Penney's ongoing "transformation," orchestrated by its new chief executive officer, Ron Johnson, who formerly led the retail division at Apple.

Under Johnson's brief stewardship, the retailer has ditched its coupon-centric pricing model in favor of "everyday low prices" -- the move was accompanied by an extensive ad campaign featuring Ellen DeGeneres -- and is remaking its stores to resemble an amalgamation of separately-branded boutiques by the likes of Levi's, Liz Claiborne, and Disney, among others.

In language reminiscent of his days at Apple, Johnson noted that: "All those boutiques are the apps. What J.C. Penney is creating is a new interface."

The recent success of these fresh bedfellows couldn't be more different. At Disney's last earnings release, it reported upbeat revenue and net income figures, growing the latter by 24% from the same period a year ago. Meanwhile, J.C. Penney reported same-store sales decreases in excess of 20%, and a net loss of $81 million.

A look to the future
While Disney is a bona fide rule maker with the industry power and financial might to perform for years to come, J.C. Penney is a much more speculative play. For a list of other companies that share Disney's potential without J.C. Penney's risk, check out our popular free report, "3 Companies Ready to Rule Retail."

Fool contributor John Maxfield does not have a financial position in any of the companies mentioned above. The Motley Fool owns shares of Walt Disney and Apple. Motley Fool newsletter services have recommended buying shares of Walt Disney and Apple. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Read/Post Comments (0) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2025982, ~/Articles/ArticleHandler.aspx, 10/26/2016 3:09:24 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,192.28 23.01 0.13%
S&P 500 2,140.20 -2.96 -0.14%
NASD 5,247.87 -35.53 -0.67%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/26/2016 2:54 PM
^DJI $18192.28 Up +23.01 +0.13%
DIS $93.64 Up +0.89 +0.96%
Walt Disney CAPS Rating: *****
JCP $8.45 Up +0.08 +0.96%
J.C. Penney CAPS Rating: *