FINANCIAL ANALYSIS

Financial Analysis

Table of Contents

Introduction3

Company Information4

J.C. Penney4

Dillards Inc.5

Financial Ratio Analysis7

Liquidity Ratios7

Profitability Ratios8

Debt Ratios9

The Process of Mergers and Acquisitions10

1.Strategic Planning10

2.Search and Selection11

3.Financial Analysis and Evaluation11

4.Proposal13

5.Negotiation and closing14

6.Transition15

7.Integration15

References17

Appendices18

A. JC Penney Income Statemtent18

B. JC Penney Balance Sheet18

C. Dillard Inc.Income Statemtent19

D. Dillard Inc.Balance Sheet20

Financial Analysis of Dillards and JC Penneys

Introduction

In the U.S. the retail industry is a division of the economy that consists of individuals and companies engaged in the selling of finish products. There are various retail chains in the U.S, which are both privately owned and publicly traded on the stock exchange. We are going to take a detail view of Macy's, Nordstrom's, Dillards and JcPennys. Two thirds of the U.S. gross domestic products come from retail sales. In recent years stores closing and cutting down are indicator of how the U.S. economy is trying to recover from the recession. People are not spending as money as they have in the past years for several reasons. One of the main reasons is job loss. Family incomes have drop due the increase of job cuts. They budgets have decreased.The retail industry entered a recession starting in December 2007. The recession affected the retail industry in several areas such as record breaking declines in sales, inventories, and consumer confidence, as well as stock prices. Federal Reserve Chairman Ben Bernanke declared the recession to be over in September 2010; however several experts state that it will take a minimum of 18 month for the retail industry to recover from the recession. In 2010, U.S. Retail were able to achieve better than expected holiday sales in previous years. This increase is moving the retail industry in the right direction. They are cutting inventories and offering more targeted discount to attract more customers.

The question which still remains is whether the retailers can keep this that momentum going. Consumers remain under pressure and jobless market stands at a 26 year high of 10%. Customers are looking for saving and are shopping at discount stores more instead of high end stores such as Dillards and JcPenny's. Stores such as WalMart and Target would be able to do better due to low prices. We do feel that the products that the higher end retailers offer cannot all be replaced. By giving discounts they will be able to get more customers.

Company Information

J.C. Penney

JCP is the leading mall-based family department store operator, with over 1,100 J.C. Penney stores in 49 states and Puerto Rico. We think the company is also adeptly addressing the needs of time-strapped shoppers with the shopping convenience afforded by its direct business, comprised of J.C. Penney specialty catalogs and the jcpenney.com web site, as well as its growing off-mall retail presence (JC Penney, 2011). JCP moved from decentralized to centralized merchandising, marketing and operating functions, and invested in a new store distribution network and in new merchandise planning, allocation and replenishment systems.

With what we view as the success of its turnaround, JCP has mapped out a new long-range plan for making ...