He told CNBC Wednesday that while the deal won't turn around the company's fortunes immediately, putting Martha Stewart stores within JCPenney stores (starting in February 2013) will help "position the company for a very strong recovery down the road."
Kleinfelter gave a lot of the credit to Penney's CEO Johnson, who he said will "approach merchandising and branding with the creativity shown in past positions," including his time as senior vice president of retail at Apple .
Others have said that if anything can revive Penney's fortunes, it will be Johnson's leadership. But Brian McGough, managing director of the retail sector at Hedgeye Risk Management, thinks Johnson "has to make up for seven years of mismanagement and underinvestment."
Klinefelter said Penney's business trends "clearly have not been strong during the last several quarters," and with pressure on earnings and margins "we are neutral on the shares at this level."
But the Martha Stewart deal — 11 million MSO shares at $3.50 a share and getting representation on its board — is one of those "big bold changes" sought by Penney's shareholders "that will finally turn around the fortunes of this business, after several years of turnaround efforts to date."
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Neither Jeff Klinefelter nor his family own JC Penney shares while Piper Jaffray does. Disclaimer